Trump Trade Officials Will Present a Hard Line in China, but Internally They Are Divided

[ad_1]

The delegation includes officials like Mr. Navarro and Robert Lighthizer, the United States trade representative, both of whom embrace a more combative approach to dealing with China than other advisers on the trip. Mr. Navarro and Mr. Lighthizer have been focused on China’s unfair trade practices for decades, and insist the country must make more dramatic changes to even the playing field for American companies. They also appear willing to follow through with the tariffs Mr. Trump has threatened, despite the pain it would inflict on many American businesses and workers, if they view it as necessary to increase their leverage with the Chinese.

Other members of the delegation, including Treasury Secretary Steven Mnuchin and Larry Kudlow, who heads the National Economic Council, appear more inclined to strike deals with the Chinese that would accomplish the president’s goal of reducing the gap between what America imports from China and what it sells to the country and head off the risk of an escalating trade war. Also on the trip are Wilbur Ross, the commerce secretary who has previously seemed receptive to striking deals, Everett Eissenstat, an experienced trade adviser, and Terry Branstad, the United States ambassador to China.

Yukon Huang, a China scholar at the Carnegie Institute, said the group is what he would call an “ideologically hybrid team” with competing views about what is really plaguing the U.S.-China relationship.

“It’s a mixture between two camps, one focused on trade issues, one focused on technology wars,” Mr. Huang said. “The reason it is such, and we don’t have a game plan, is the issues aren’t well understood.”

Among the concerns are a range of practices, including barriers to entry, subsidies and regulations that pressure American companies to hand over sensitive trade secrets, which China uses to make national champions of its homegrown firms. These tactics have enabled the Chinese to dominate global industries like steel, aluminum and solar panels in the past, and American trade advisers say they are currently tipping the playing field for industries of the future, including semiconductors, robotics, cloud computing, electric vehicles and biotechnology.

Photo

China has been able to dominate global industries like steel, aluminum and solar panels in the past, and American trade advisers say it is tipping the playing field for industries of the future, including semiconductors, robotics, cloud computing, electric vehicles and biotechnology.

Credit
China Daily, via Reuters

Speaking at the U.S. Chamber of Commerce in Washington on Tuesday, Mr. Lighthizer said that the United States has nearly a third of the world’s high technology business, followed by China, and that China’s trade practices were imperiling the economic future of the United States.

Continue reading the main story

“I’m always hoping but not always hopeful,” Mr. Lighthizer said about the prospect of success from the upcoming talks.

Many American industry leaders support Mr. Lighthizer’s efforts to expand access to Chinese sectors that are restricted to American companies and protect American intellectual property from theft and coercion — longstanding complaints of American business leaders about China’s tactics.

But they are wary of the administration’s approach to resolving longstanding problems. Some business leaders fear that the Trump administration may simply accept Chinese offers to lower the trade surplus by purchasing more American goods and open up segments of the economy that are already mature, like financial services, electronic payments or the auto sector. On the other hand, they worry about the economic damage from a trade war if the anti-China wing of the delegation wins the internal debate and follows through with its threats.

Thomas J. Donohue, the president of the U.S. Chamber of Commerce, said Tuesday that there were “serious, growing and legitimate challenges” about Chinese practices, but he also cautioned against the effect of a tit-for-tat tariff war.

“We are deeply concerned that the proposed tariffs list and escalating tariff threats from the administration will not effectively advance our shared goal of changing these harmful Chinese practices,” he said.

Analysts continue to warn of potential risks to economic growth in the United States if administration officials cannot negotiate a quick resolution with the Chinese, and the tariffs go into effect. Goldman Sachs analysts said in a research note this week that new investment restrictions on China that the administration plans to soon outline could also rattle investors.

“Some additional market-disruptive policy moves regarding U.S.-China trade seem likely,” Goldman’s Alec Phillips wrote in the research note, which downplayed the odds of success in this week’s talks: “We believe a substantial breakthrough at this meeting is unlikely as the issues the U.S. has raised — intellectual property policies, technology transfer, and the ‘Made in China 2025’ strategy, in particular — are not the type of technical trade issues that can be resolved quickly.”

The National Association of Manufacturers, one of the most influential business lobbying groups in Washington, has been pressing Mr. Trump and his economic team to open negotiations with the Chinese on a free-trade agreement, an ambitious move that many trade experts doubt would bear fruit, given the struggles of American negotiators to secure far more limited agreements with China in the past.

Continue reading the main story

The manufacturers’ president, Jay Timmons, urged Mr. Trump in a letter earlier this year to “consider pursuing a truly modern, innovative and comprehensive bilateral trade agreement with China that wholly restructures our economic relationship.” The group’s vice president for international economic affairs, Linda Menghetti Dempsey, told a congressional subcommittee in April that such an effort would be “at once both a radical idea and, in our estimation, the most pragmatic and effective way forward” on trade with China.

The Obama administration attempted to negotiate a more limited agreement with China, a bilateral investment treaty, but could not finalize the deal before Mr. Trump took office. His team has not yet revived the talks.

Manufacturers have discussed the plan directly with Mr. Kudlow and with Vice President Mike Pence. Proponents say they believe the idea could appeal to Mr. Trump’s preference for bilateral trade agreements and his confidence in his negotiation skills.

However, White House officials have given no public indication that they are considering such a negotiation. Mr. Lighthizer, Mr. Navarro and other proponents of a harder line against China have argued that the Chinese tend to use such dialogues as a delaying tactic, and that trade negotiations with the Chinese have not been productive in the past.

Continue reading the main story

[ad_2]

Source link