McCain’s responsibility for the fake Chinese military parts crisis

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The Arizona Republican’s biggest triumph against higher domestic content rules for Pentagon procurement came in 2003, when he joined the Bush administration in defeating then House Armed Services Committee Chairman Duncan Hunter’s bid to raise the U.S. content requirements for U.S. military systems, which had long been a mere 50 percent.  

McCain, then his Senate counterpart, justified his opposition to Hunter’s amendment to the 2004 Defense Authorization bill with the platitude that “free trade is an important element in improving relations among all nations and essential to economic growth” and the seemingly more pragmatic claim that “the American taxpayer and most importantly our servicemen and women … depend on the Department of Defense to train them and Congress to equip them with the best equipment irrelevant of its country of origin.”

McCain professed to recognize the need to keep certain critical defense production capabilities in American hands.  But he insisted that a stronger Buy American policy “raises the costs of procurement for DOD and cuts off access to potential state-of-the-art technologies” and could spark defense trade wars with close allies – even though such retaliation would obviously restrict their own access to America’s generally superior defense products. 

The following year, during a similar Buy American debate, he pooh-poohed a proposed ban on Pentagon purchases of foreign supercomputers and even made light of another suggested Buy American measure, smirking “Whew. I know we’ll sleep better at night knowing that all of our carbon plates are manufactured in the U.S.”

McCain has also unreservedly supported the dramatic expansion of U.S.-China trade by predicting, among other blessings, “unprecedented levels of protection for intellectual property rights” and a “maximized” American presence in the country “through commercial investment.” 

As no less than the Government Accounting Office has reported, China’s electronics industry could not have reached such gargantuan proportions without such investment – which has included massive technology transfer by U.S.- and other foreign-owned multinational companies. 

Indeed, McCain alluded to these companies’ widespread practice of subcontracting production to Chinese firms when he told Fox News’ Greta Van Susteren that “Part of the problem is that some of these [counterfeit] parts are no longer manufactured by the original manufacturer.”

Now McCain is sounding alarm bells about the inevitable results of his preferred defense manufacturing and China trade policies.  “The problem of counterfeit parts in the defense supply chain is more serious that most people realize,” he just warned.   They “threaten the safety and mission readiness of our armed forces because they are unreliable,” he continued.  

But the prescriptions he has suggested – “The first thing is tell the Chinese to stop” and requiring U.S. defense contractors to inspect their products more rigorously (guaranteed to increase their costs) – are pathetically inadequate.  When the offshoring trade deals supported by McCain and other trade policy extremists created no-brainer business incentives to send big chunks of American manufacturing to a potential adversary like China, they unavoidably created powerful incentives to send abroad big chunks of vital American defense manufacturing as well.

If the Arizona Republican is serious about equipping U.S. forces with reliable products, he’ll start working to pass those stronger Buy American military procurement policies he helped to kill, and overhaul China and other trade policy decisions that are clearly undermining the nation’s security as well as prosperity.

Alan Tonelson is a Research Fellow at the U.S. Business and Industry Council, a national business organization representing nearly 2,000 small and medium-sized domestic manufacturers.  The author of “The Race to the Bottom” (Westview Press, 2002), he is a regular contributor to the Council’s AmericanEconomicAlert.org website.