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Published on June 1st, 2017 | by Nevin Gussack

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The Triumph of Corporate Conservatism: The Heritage Foundation Supports Trade Privileges for China, Vietnam, and Russia

When the Heritage Foundation was first formed in the late 1970s, it espoused a general anti-communism that was deeply suspicious of the intentions of the Soviet Union and Red China. While Heritage leaned in a free trade direction, it was critical of the multinational corporate lobby that promoted trade with the USSR. Even under the Reagan Administration, the Heritage Foundation also called out the State Department for supporting communist regimes in the Warsaw Pact and the Third World. However, in the late 1980s, the Heritage Foundation started to make friendly overtures to China. More than likely, the Chinese Communist Party utilized influence operations in an attempt to draw the Heritage Foundation away from its anti-Beijing stance.

In March 1987, Huang Hua, Vice-Chairman of the Chinese National People’s Congress Standing Committee met with Burton Yale Pines, Vice-President of Heritage Foundation, and Martin Lasater, Director of Heritage’s Center of Asian Studies. The Heritage Foundation delegates who visited China were guests of the Chinese Association for International Understanding.[1] By the 1990s, the Heritage Foundation also commenced a hardcore campaign to promote globalist free trade. Its President Edwin Feulner made the promotion of free trade and “resist(ing) efforts to ‘protect’ certain national industries” at the top of his list of conservative priorities for the 1990s.[2] The Heritage Foundation’s shift to a pro-Beijing position was the result of two factors: ideological fealty to the concept of free trade, especially in the post-Cold War climate, and the power of wealthy donors in corrupting scholarship.

This pro-Chinese shift resulted in the occasional squashing of studies critical of China that were produced by scholars at the Heritage Foundation. There was at least one example where an anti-communist analyst was allegedly purged from the Heritage Foundation at the behest of the multinational corporations allied with Red China. One notorious example was the case of Richard Fisher Jr., who was a China expert at the Heritage Foundation. Fisher was terminated as a result of pressure by the pro-Chinese Secretary of Labor Elaine Chao and AIG Chairman Hank Greenberg. A Congressional aide who worked with Fisher noted that “Elaine Chao was part of the deal that got Rick Fisher fired from Heritage…She pushed him out not because of free-trade issues, but because he raised national security concerns over China.” A Heritage insider reported that Chao “was not supportive of any of his writings on the Chinese military.” In 2000, AIG Chairman Hank Greenberg protested a Heritage Foundation paper by analyst Stephen J. Yates which urged the postponement of PNTR for China until security matters were adequately addressed. If this report was published, Greenberg threatened to cut off funding to the Heritage Foundation. In response to this pressure, Heritage issued a new report titled How Trade with China Benefits Americans, which was co-authored by the former American Military Attaché in Beijing, Larry M. Wortzel. Greenberg was also upset by Fisher’s papers which detailed Chinese war planning against the United States and Taiwan. A Congressional aide noted that Greenberg’s “benefactors in Beijing more than likely told him he’d be wise to oppose American national security if he wants to keep selling insurance policies out of Shanghai…That’s the way the communists do ‘business.’”[3]

As I previously stated, the Heritage Foundation commenced open relations with the Chinese Communist Party in the late 1980s. Eventually, they adopted a fully pro-free trade position towards Red China. Its chief proponent was Derek Scissors. Scissors reportedly counseled mostly multinational corporate CEOs concerning their Red Chinese operations.[4] Scissors’ profile on LinkedIn confirmed what was previously posted on the website of the Heritage Foundation: “For a decade before that, I worked in the private sector as a business consultant to companies interested in China.”[5] It would appear that Scissors viewed trade with Red China through the lens of the “stateless merchant” who previously conducted business with Beijing. Scissors was previously involved in global business, which more than likely allowed him to become culturally de-nationalized away from serving as an unconditional defender of the national interest. It was also possible that avarice clouded his judgment when compiling policy reports regarding China. In all probability, Scissors possessed contacts with American multinational corporations that were leftover from his work as a consultant. Such multinational firms could be potential donors to Heritage, especially in light of its increasingly pro-Beijing stance. Heritage also received donations from various major multinationals which conducted business in Russia, Vietnam, and/or Red China. Donors to the Heritage Foundation included Koch Industries, Boeing, Microsoft, and Wal-Mart. These firms also conducted varying levels of business with American adversaries.[6]

In a Heritage Foundation report, Scissors observed US-China relations through the romantic lens of a classical liberal free trader. Despite the destruction of American manufacturing from dumping and outsourcing, Scissors noted that “China doesn’t hurt the US by trading with us.” Scissors selectively ignored the national security dilemma posed by Chinese threats to dump their investments in US Treasury notes: “…Chinese purchases of federal debt don’t hurt us. Unfortunately, these purchases don’t help us much either. By buying our bonds, the PRC makes it easier for the U.S. to run large budget deficits, which damages the private sector and reduces long-term economic growth. That isn’t China’s fault, it’s ours. There’s your bottom line. We need to get our own house in order. If we do, we can much more easily cope with the genuine problems that we have with China. If we don’t, we’ll hurt ourselves far more than the Chinese ever could. The American future doesn’t rest with China. It rests where it always has: with us.”[7] Scissors took a Blame America First position that has become endemic of many “conservatives” and libertarians regarding the trade relationship with Red China. Typically, they ignored the predatory trade practices of the communists in Beijing and the lobbying by their enablers in the United States.

As my book Red Dawn In Retrospect briefly discussed, foreign purchases of American debt arose as a result of the influence of free traders and internationalists looking to finance the growing trade deficits and not merely excessive domestic spending.

Heritage’s love affair with the concept of economic engagement with our international adversaries also extended to Putin’s Russia and communist Vietnam. The corporate conservatives at the Heritage Foundation claimed that the United States should approve PNTR for the thugs in Moscow: “As a fellow WTO member, the United States should be in a position to benefit from Russia’s ascension. A Peterson Institute study estimates that the volume of U.S. exports of merchandise and services to Russia would double from $11 billion in 2011 to $22 billion over about five years if WTO rules apply to U.S. trade with Russia…Extending PNTR would allow the U.S. to fully benefit from the concessions Russia made in order to join the WTO.”[8]  Yet the reality clearly illustrates that Russia is a nonmarket economy with CPSU-created crony capitalist features, whose long range interests are hostile to the United States and the free nations of the world. Lastly, the trade deficit with Russia worsened after PNTR was granted by the majority of Democrats and Republicans in the Congress and signed off by Obama. Even with sanctions, America’s trade deficit with Putin’s Russia totaled approximately $13 billion.[9]

The Heritage Foundation also backed Most Favored Nation (MFN) trade status for communist Vietnam. They reasoned that the Cold War was allegedly over and that Vietnamese Communism was liberalizing. In 2006, Heritage Foundation trade analysts Daniella Markheim and Dana R. Dillon went further and wrote a paper which stated the case for granting communist Vietnam permanent normal trade relations (PNTR) status. Markheim and Dillon gave the standard free trade talking points for granting Vietnam PNTR: “The U.S. would be left on the sidelines to watch other countries reap the benefits of the hard work done to execute a strong agreement for Vietnam’s accession. Vietnam is one of the fastest growing economies in Southeast Asia, and the U.S. is Vietnam’s largest investor, as well as a major trading partner. The cost of exclusion would be significant to both countries…The recently negotiated U.S.-Vietnam bilateral agreement is especially effective in ensuring that accession will result in greater trade opportunities for all WTO countries. Farmers, manufacturers, and service exporters will gain meaningful market access in Vietnam.”[10] Once again, the points enunciated by Markheim and Dillon are simply empty rhetoric in light of the fact that the United States had over a $24 billion trade deficit with communist Vietnam.[11]

Markheim and Dillon asserted that PNTR for Vietnam would assure improved cooperation with the communists in locating MIAs and heighten reconciliation between the two countries: “Failing to approve PNTR for Vietnam would mark a distinct reversal of the opening of trade between the U.S. and Vietnam and would have real consequences for the strategic relationship between the two countries. As Senator Max Baucus explained at the introduction of the Vietnam PNTR bill, ‘Granting permanent normal trade relations status to Vietnam will complete the process of reconciliation begun 15 years ago and worked for by Democrats and Republicans alike, on Capitol Hill and in the White House. This step will allow America to deepen its relationship with one of the most dynamic and successful emerging markets in a key region of Asia. …American interests in Vietnam extend beyond trade. The United States is intensely interested in fully accounting for American soldiers missing in action during the war, improved human rights conditions, and democracy for the beleaguered Vietnamese people. Normal trade relations will assist in obtaining these objectives.”[12]  Despite Markheim’s assertions, Vietnam remained a committed adversary of the United States which adhered to Marxism-Leninism. Hanoi remained aligned with Russia, Cuba, and even to some degree Red China. This is documented in my book A Riddle Wrapped Up in an Enigma: The Gorbachev-Yeltsin-Putin Deception. Furthermore, the Vietnamese Communists proved to be highly deceptive in the proper accounting of MIAs and POWs. This was documented in books such as Bamboo Cage by Nigel Cawthorne, Betrayed by Dr. Joseph D. Douglass Jr., and The Men We Left Behind by Mark Sauter. Trade privileges would only embolden a totalitarian dictatorship that was still aligned against American interests.

Remarkably, Dillon and Markheim also used the same discredited talking point which stipulated that open trade would spur the “reform” of the communist regime in Hanoi: “…while no trade agreement, no matter how comprehensive, can itself install democracy or solve a country’s human rights problems, trade agreements can force governments to enforce the rule of law. The rule of law only works when the government is held accountable. There are signs that this is happening in Vietnam. In recent years, he Communist Party has significantly reduced its formal involvement in government operations, leaving government officials wider latitude to implement policy. Although elections in Vietnam are neither free nor fair, there have been some improvements. For example, the 2002 national elections marked the first time non-Communist candidates were elected to the national legislature. Human rights in Vietnam have made steady, albeit slow, improvement since the bilateral trade agreement came into force. The national legislature has passed laws protecting Vietnamese from religious persecution and physical abuse by police. Unfortunately, however, enforcement of those laws is inconsistent. The improvements to date have not been not earthshaking or even sufficient, but without Vietnam’s active pursuit of WTO membership, it would still be locked in North Korea-like despotism.”[13] 

In essence, Markheim and Dillon proved that the lifting of the American embargo and the subsequent granting of MFN for Vietnam did not contribute to meaningful reform in that communist country. Furthermore, laws that exist on paper in Vietnam are meaningless in a dictatorship still committed to an oligarchic form of collectivism where power is maintained at all costs. Non-communist candidates are still under the control of the Vietnamese Communist Party. Essentially, Markheim and Dillon tell their readers: “Trust our judgment…Vietnam really has not reformed in a meaningful way…grant them PNTR anyway!”

In October 2012, a Heritage Foundation blog posting strongly opposed the protection of American firms such as New Balance from further injury due to surges of imports from communist Vietnam: “Embracing the cultural heritage of manufacturing in New England is honorable, but doing it at the expense of American consumers who suffer from the high prices that these tariffs cause is just selfish. We should want more from our economy than manufacturing jobs that our great-great-grandparents had. Protecting old industries is not the way to make America more competitive in the 21st century.” Many average American consumers suffer because of falling and stagnant wages where families have to work two or more jobs to survive economically. Such a state of affairs arose largely from free trade and the crony capitalist system of globalization. Furthermore, this writer of the blog piece clearly exhibited a disdain for any level of economic patriotism and instead supported the slave communist economy in Vietnam: “This cultural soft spot for small town manufacturing is epitomized by New Balance, whose Lawrence, Massachusetts factory resides in a 19th century textile mill. This ancient multi-storied mill has to compete with huge, modern, and efficient plants in Vietnam.”[14] While the outside of the New Balance mill appeared as an older structure, the inside of the plant was teaming with workers and modern machinery.[15]


[1] “Huang Hua Meets US Heritage Foundation Vice-President” Xinhua General Overseas News Service March 23, 1987
[2] Judis, John. “The Conservative Crackup” The American Prospect December 4, 2000 Accessed From: https://prospect.org/article/conservative-crackup
[3] Sperry, Paul. “Chao’s Pro-China Coup at Heritage?” Worldnetdaily January 16, 2001 Accessed From: http://www.wnd.com/2001/01/7851/
[4] This detail concerning Scissors involvement with CEOs who invested in China was erased from his updated biography on the Heritage Foundation website. The original citation is “About: Derek Scissors” Heritage Foundation Accessed From: http://www.heritage.org/about/staff/s/derek-scissors
[5] “Derek Scissors” LinkedIn Profile Accessed From: https://www.linkedin.com/pub/derek-scissors/87/5a5/626
[6] “Heritage Foundation” Accessed From: http://www.sourcewatch.org/index.php/Heritage_Foundation#Funding
[7] Scissors, Derek. “The U.S. and China: Jobs, Trade, and More” Heritage Foundation October 11, 2012 Accessed From:http://www.heritage.org/research/reports/2012/10/the-us-and-china-jobs-trade-and-more
[8] Seward, Cameron. “Normal Trade Relations with Russia: We’re Almost There” The Daily Signal Heritage Foundation December 4, 2012 Accessed From:http://blog.heritage.org/2012/12/04/normal-trade-relations-with-russia-were-almost-there/
[9] “Trade in Goods with Russia” Accessed From: https://www.census.gov/foreign-trade/balance/c4621.html
[10] Markheim, Daniella and Dillon, Dana Robert. “The Case for Permanent Normal Trading Relations with Vietnam” July 12, 2006 Heritage Foundation Accessed From: http://www.heritage.org/research/reports/2006/07/the-case-for-permanent-normal-trading-relations-with-vietnam
[11] “Trade in Goods With Vietnam” Accessed From: https://www.census.gov/foreign-trade/balance/c5520.html
[12] Markheim, Daniella and Dillon, Dana Robert. “The Case for Permanent Normal Trading Relations with Vietnam” July 12, 2006 Heritage Foundation Accessed From: http://www.heritage.org/research/reports/2006/07/the-case-for-permanent-normal-trading-relations-with-vietnam
[13] Markheim, Daniella and Dillon, Dana Robert. “The Case for Permanent Normal Trading Relations with Vietnam” July 12, 2006 Heritage Foundation Accessed From: http://www.heritage.org/research/reports/2006/07/the-case-for-permanent-normal-trading-relations-with-vietnam
[14]  Olson, Ryan. “Small Town Sympathy Shouldn’t Trump Common Sense Trade Policy” Heritage Foundation October 11, 2012 Accessed From:http://blog.heritage.org/tag/new-balance/
[15] “Reach the Beach Part 1: New Balance Factory Tour” September 17, 2014 Accessed From: Reach the Beach Part 1: New Balance Factory Tour – Run Gia Run




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