Saturday, March 17, 2012

Strengthening Mainland China

Concluding a piece in the Wall Street Journal editorial page last month, Mitt Romney wrote

The sum total of my approach will ensure that this is an American, not a Chinese century. We have much to gain from close relations with a China that is prosperous and free. But we should not fail to recognize that a China that is a prosperous tyranny will increasingly pose problems for us, for its neighbors, and for the entire world. 

Apparently, though, China's prosperity poses no problem for Bain Capital, which finds China insufficiently tyrannical:

Shortly after arriving in Puerto Rico to campaign before Sunday’s primary, Mitt Romney said he was unaware of his former firm’s ties to a company that is reportedly providing technology services to a Chinese government surveillance program.

During a news conference moments after he stepped off a chartered flight from Illinois, Romney was asked about a report in Friday’s New York Times that Bain Capital, the Boston-based private equity firm that he ran for 15 years, had purchased Uniview Technologies, the video surveillance division of a company supplying services to the Chinese government’s Safe Cities program. 

Though the stated purpose of the program is crime prevention, human rights advocates have argued that it is an effort by the government to increase surveillance on dissidents, according to the Times. 

The 2012 GOP presidential nominee stands to make a killing off assisting the Red Chinese to spy on its own citizens even though

Romney left Bain Capital some 13 years ago and his investments are managed in several blind trusts — two points that he immediately made to reporters when he was asked about the matter on Friday. Most of Romney’s income is held three separate blind trusts that the former Massachusetts governor set up in 2003 when he took office. The New York Times reported that a blind trust in his wife’s name held a stake of between $100,000 and $250,000 in the Bain Capital Asia fund that acquired Uniview.

Romney's preferences also are demonstrated by his stance on the proposed Keystone XL oil pipeline, about which earlier this month (channeling Eldridge Cleaver) he told an audience in North Dakota

When someone says we want to bring in a pipeline that's going to create tens of thousands of jobs to bring oil from Canada, how in the world could you say no?     This is a president who does not understand energy. He is the problem. He is not the solution.

In the United States, oil demand is way down, supplies are way up, and prices have soared.Supply up, demand down, prices up; sounds like the free market at work.   But with U.S. oil output at its highest level in almost nine years, Repub enthusiasm for dirty oil and higher prices in the Midwest is at a fever pitch.     It may be no mystery given that, as Eleanor Clift reports

Rep. Ed Markey, the ranking Democrat on the House Natural Resources Committee. Markey agrees it would be “a very good thing if the U.S. could be reliant on North American-produced oil,” but that’s not what the Canadians intend, he says. Keystone oil is headed for Port Arthur, Texas—a foreign-trade zone that allows tax-free transactions—and then on to Asia, not the U.S. This is an important point that is rarely made. “That foreign-trade zone is what made me suspicious of what the real agenda was for this oil,” says Markey.

At a congressional hearing in December, Markey asked the president of TransCanada if he would agree to allowing Keystone XL oil and its refined products to stay in the U.S. He said no. So Markey then proposed an amendment to that effect, and Republicans said no—that it couldn’t be done, because the market for oil is not just domestic; it’s global. What Canada wants to do, says Markey, “is create a connection between Alberta and Asia and use the United States as the place where the pipeline gets constructed. And so if that’s all we are is a middleman in this transaction, then the American people should know that.” 


The idea that Keystone XL enhances U.S. energy security is undermined by Valero’s business model that seeks to export products made with imported oil while further importing gasoline from a third country. Not only is Valero increasing U.S. imports of oil and gasoline, but it will also avoid paying tax while doing so. The Port Arthur refinery operates as a Foreign Trade Zone (FTZ), which traditionally gives tax benefits to companies that use imported components to manufacture items within the United States.

Usually refineries importing oil tax-free will still pay taxes when selling the refined products into the U.S. market. By both importing into and exporting from Port Arthur the company will avoid paying tax on the product sales.  In sum, Valero appears to have positioned itself with a captive supply into an offshore tax-haven where it refines product not for the United States, but for foreign markets. Only the pollution stays behind.

Mitt Romney pledges that as President, he would enact policies enhancing the security of the United States and "will not continue an economic relationship that rewards China's cheating and penalizes American companies and workers."       Surely, that's an iron-clad guarantee, as has been Romney's position on a path to citizenship for illegal immigrants. Or the Reagan presidency.    Or global warming.     Or don't ask, don't tell.  Or embryonic stem cell research.   Or health care mandates.    Or the no new taxes ever pledge of Americans for Tax Reform.    Or abortion.   Or- well, you get the idea.

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