With the field of Democratic and Republican presidential candidates narrowing in the aftermath of the Iowa caucus and New Hampshire primary, Harbour Times begins a series of candidate profiles and what the candidate’s election as president might mean for Hong Kong.
Photo credit: Bernie Sanders; flickr.com
Editor’s Note: This article was updated on February 15th, 2016 to include the penultimate paragraph about FATCA.
Candidate for the Democratic presidential nomination Senator Bernie Sanders of Vermont is no stranger to policy debates even if large numbers of voters are first learning about him during the primary season. Sanders served from 1991 to 2006 in the House of Representatives as Vermont’s sole representative, and subsequently as Vermont’s junior senator to the liberal champion Patrick Leahy, who has served as Vermont’s senator since 1975. Based on the support Sanders received in the Iowa caucus and New Hampshire primary, he is becoming more competitive against former first lady, senator and Secretary of State Hillary Clinton.
At times a socialist, now a self-described “democratic socialist”, and for most of his Congressional career an independent, Sanders typically votes with the Democratic members. During his presidential candidacy, he has argued for policies that he believes will help America’s middle class. Despite his socialism, plenty of Democratic senators spend the taxpayers’ money more enthusiastically than Sanders; in 2011, Sanders was only the 55th spendiest senator, while the American Conservative Union rated 11 senators more liberal than Sanders in 2008.
If Sanders is elected, Hong Kong will, without a doubt, “feel the Bern”
Sanders’ current committee assignments are Committee on the Budget (Ranking Member), Committee on Environment and Public Works (Subcommittee on Clean Air and Nuclear Safety, Subcommittee on Green Jobs and the New Economy, and Subcommittee on Transportation and Infrastructure), Committee on Energy and Natural Resources (Subcommittee on Energy, Subcommittee on National Parks and Subcommittee on Water and Power), Committee on Health, Education, Labor, and Pensions (Subcommittee on Children and Families and Subcommittee on Primary Health and Aging (Ranking Member)), and the Committee on Veterans’ Affairs.
Although Sanders has little record on Hong Kong issues, his positions on issues relevant to Hong Kong’s success give Hong Kong much to be concerned about. If Sanders is elected, Hong Kong will, without a doubt, “feel the Bern”.
U.S. – China Relations
Sanders website sets out a number of policy positions on China that does not differ much from other presidential candidates, regardless of party. Sanders identifies trade relations as the primary problem in U.S. – China relations. China’s military spending and human rights issues (see below) are also part of his position statement.
A U.S.-China currency war would certainly be detrimental to Hong Kong.
Sanders labels U.S. trade policies as “disastrous” and makes the unsubstantiated claim that trade with China forces American workers to compete against low-wage labour and only serves largely to benefit already wealthy corporations; his website also claims that the U.S. trade deficit with China has led to the loss of over 2 million U.S. manufacturing jobs since 2001. Sanders ignores the benefits to U.S. consumers of lower priced goods, that domestic U.S. manufacturing is often more productive, and higher on the value chain than China manufacturing, and that exports to China creates sales, profits, and jobs at U.S. companies. According to the U.S. – China Business Council, exports to China helped support a wide range of industries including transportation equipment, crop production, computers and electronics, and chemicals, along with export-related jobs in America’s port cities, with forty-two states experienced at least triple-digit export growth to China since 2005, and in 2014, thirty-one states exported more than $1 billion to China.
Sanders’ opposition to trade with China dates from his 1999 vote against granting China “Most Favored Nation” status, and his 2000 vote against Permanent Normal Trade Relations with China that facilitated China (and Taiwan’s) entry into the World Trade Organisation and requires China to adhere to WTO rules, including market access for U.S. companies.
Sanders is a founding member of the Congressional Progressive Caucus, a group of congressmen eager to impose penalties on China as a currency manipulator despite arguments China does no such thing. As The Wall Street Journal recently pointed out, if Zhou Xiaochuan, governor of the People’s Bank of China, is a currency manipulator, then Janet Yellen is an interest-rate manipulator. A U.S.-China currency war would certainly be detrimental to Hong Kong.
Hong Kong is well-positioned to benefit from any FTAs in the region…Unfortunately for Hong Kong, Sanders vehemently objects to the TPP and he joined other progressives…to vote against it
Unusual for the American left, Sanders also states on his website concerns about China’s military spending. According to Sanders, the U.S. “must deter China’s military build-up” and he proposes to do this via sanctions on any individual or country that violates an arms embargo with China, including denial of participation in cooperative research and development, prohibition of ownership and control of any business registered as a manufacturer or exporter of defense articles or services, removal of all licenses relative to dual-use goods or technology, and the prohibition of participation of any foreign military sales. Absent greater specificity, such policies, if implemented, would increase compliance costs for Hong Kong based businesses, and potentially cause them to run afoul of U.S. law.
Trans Pacific Partnership, Free Trade
Although not a signatory to the Trans-Pacific Partnership, according to the Hong Kong Trade Development Council, as an economy where services account for more than 90 per cent of the GDP, Hong Kong is well-positioned to benefit from any FTAs in the region. This is particularly true if these agreements put significant, if not equal, emphasis on comprehensive economic cooperation, including FDI and investment facilitation, on top of merchandise trade liberalisation. The American Chamber of Commerce in Hong Kong recently suggested Hong Kong join the TPP in its submission to the Chief Executive’s Policy Address 2016.
Unfortunately for Hong Kong, Sanders vehemently objects to the TPP and he joined other progressives such as Senator Elizabeth Warren (Democrat – Massachusetts) to vote against it. Among Sanders objections are that the TPP will allow corporations to outsource even more jobs overseas, Wall Street would benefit at the expense of everyone else, and that the TPP has no expiration date, making it virtually impossible to repeal.
In 1998, Sanders co-sponsored a House resolution calling on the president to make the opening of additional Chinese consulates in the US contingent on China allowing the U.S. to open a consulate in Lhasa
Sanders neglects to understand that the TPP has the potential to increase wages, as manufacturing and services jobs shift toward more export-oriented industries, and that increases in foreign investment in the United States usually follow new trade agreements and create high-wage jobs. American financial firms already benefit from market access under existing bilateral and multilateral agreements and operate throughout the TPP markets often from a regional headquarters in Hong Kong. The TPP text debunks the myth that withdrawal is impossible.
Human Rights in China
Sanders is a member of the Congressional Human Rights Caucus though he is not known as a leader on the subject. Like many on the American left in the period after the end of the Cold War, an aversion to American exceptionalism has silenced the voices that fought for human rights behind the Iron Curtain on both the American left and right. In recent years Sanders was a strong advocate to establish relations with Cuba, despite its notorious human rights record.
With regard to China, Sanders has focused his attention on Tibet to the detriment of other human rights issues. In 1998, Sanders co-sponsored a House resolution calling on the president to make the opening of additional Chinese consulates in the US contingent on China allowing the U.S. to open a consulate in Lhasa.
As a senator, Bernie’s co-sponsored legislation condemning the violence by Chinese government in Tibet. Bernie has also co-sponsored a congressional resolution condemning China for its poor human rights record, and is a member of the Congressional Human Rights Caucus.
Although Sanders’ calls on China to “Stop the persecution of all religious practitioners and safeguard fundamental human rights” he mentions only Falun Gong and Tibetans specifically.
Sanders also has praise for China. In a recent Tweet, he praised China’s 14 weeks of maternity leave. Actor James Woods, increasingly outspoken in his political views, responded with a tweet that “China has notoriously killed female infants for population control, you utter moron”.
Hong Kong’s Autonomy
Sanders is silent on Hong Kong autonomy and what U.S. policy should be to ensure the future success of One Country, Two Systems
Despite the attention given to Tibet issues on his website, Sanders is silent on Hong Kong autonomy and what U.S. policy should be to ensure the future success of One Country, Two Systems.
Sanders proposes a financial transaction tax, despite evidence that a such a tax on capital will make it more expensive for those who require it to invest and result in less investment in the future and smaller economic growth. Although some argue that a financial transaction tax is a smart way to raise revenue and reduce trading that makes markets more volatile, if implemented in the United States it will increase transaction and compliance costs for Hong Kong based traders and potentially lead to pressure on Hong Kong to increase its transaction taxes to U.S. and/or European levels.
Sanders also proposes to break up large financial institutions. Although such a policy might create revenue for service providers such as lawyers, accountants and consultants, ultimately the resulting dislocation in financial industry and job losses would harm Hong Kong’s role as a financial center.
Sanders is not known for an interest in Asia issues other than his periodic statements of support for human rights in Tibet and his opposition to trade with China and the TPP. A President Sanders would enter office with similar outlook as incumbent President Barack Obama, that is, inward looking and a focus on social spending. It’s hard to imagine President Sanders hosting ten ASEAN leaders at a summit in California the way President Obama will next week.
In fact, Sanders own website exposes his lack of familiarity with the region, conflating China and the TPP even though China is not a signatory: Referring specifically to the 2015 Trans-Pacific Partnership, Bernie has decried trade deals with China as being “designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy.
Foreign Account Tax Compliance Act
In a series of questions-and-answers with Democrats Abroad, Senator Sanders states that it should be “easier for law-abiding Americans living overseas to manage their personal finances and buy a house, while making it harder for tax cheats to hide their money in offshore tax havens to avoid paying their fair share in taxes.” While he does not support FATCA repeal, Senator Sanders supports the FATCA Same Country Safe Harbor, an initiative supported by other organisations that represent the interests of overseas Americans such as the Association of Americans Resident Overseas. This would exempt from FATCA reporting requirements those accounts where the filer has bona fide residence. Senator Sanders also states his support for removing unnecessary duplication in the reporting requirements between FBAR and FATCA.
Hong Kong not burning for Bernie
Although many pundits still believe it unlikely that Sanders will win the Democratic nomination or the general election, if remains a competitive candidate in the coming months the candidate whose slogan is “Feel the Bern” can certainly scald Hong Kong if his popularity pushes stakeholders such as other presidential candidates, labour unions or the media to champion some of his policy proposals.
Editors Note: This article was updated on February 15th, 2016 to include the penultimate paragraph about FATCA.
D.C. International Advisory
Ross Feingold has extensive experience with international finance, regulatory, and policy issues.
Mr. Feingold worked in Hong Kong for The Royal Bank of Scotland supporting its Asia Sale Program, and was the project manager for the bank’s opening of a new office in Taiwan.
He has worked with Deutsche Bank (Hong Kong), J.P. Morgan (Singapore) and international law firm Russin & Vecchi (Taipei), and Jardine Fleming (Taipei).
Mr. Feingold presently serves on the global board and as Asia director of The Association of Americans Resident Overseas, a non-partisan advocacy organization that represents the interests of U.S. citizens living and working abroad. He advises on strategic communications and outreach efforts, and interacts extensively with Asian governments and numerous international organizations. He is admitted to practice law in New York and Washington DC
Asia Chairman, Republicans Abroad
Asia Chairman, Mitt Romney presidential campaign (Primary, 2008)
Asia Chairman, John McCain campaign (General Election, 2008) International finance committee, Mitt Romney Presidential Campaign (2012)
East Asian Studies and Political Science, cum laude, from Bucknell University
J.D.,American University’s Washington College of Law (Securities and Corporate Finance
Mr. Feingold studied Mandarin at National University of Singapore and National Taiwan Normal University.
Mr. Feingold speaks frequently about political and foreign policy issues, appearing on BBC, Bloomberg, CNBC, Channel News Asia, Voice of America and other networks.
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