I am certainly not trying to trivialise your points. I simply think that Trump is addressing the grey area where trade distortions are occurring and where he rightfully suggests that strong leadership and skilled negotiations could redress some of the unfairness and harm.
Of course, Trump is not suggesting anything new or exceptional when he promises to discuss improved trade relations with China. There will always be issues that need to be negotiated. What may be new in a Trump presidency is that Trump is a seasoned negotiator with a lifetime of hard experience to draw upon.
The internet has myriad papers looking at trade issues. I looked at a few and thought this one was balanced and objective. It is 61 pages but I will hard-copy the short summary. Now Trump's public position has a lot of differences with this author. But that is not my point. My point is that intelligent negotiation must and will occur. And negotiation often starts with a completely contrived set of demands.
I accept very little of what Trump says at face value because it is obvious to me that he is negotiating right now--in foreign and in domestic affairs. I believe that 100%.
fas.org
Following is a summary
Summary
U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.-
China trade rose from $2 billion in 1979 to $591 billion in 2014. China is currently the United
States’ second-largest trading partner, its third-largest export market, and its biggest source of
imports. In addition, according to one estimate, sales by foreign affiliates of U.S. firms in China
totaled $364 billion in 2013. Many U.S. firms view participation in China’s market as critical to
staying globally competitive. General Motors (GM), for example, which has invested heavily in
China, sold more cars in China than in the United States each year from 2010 to 2014. In
addition, U.S. imports of low-cost goods from China greatly benefit U.S. consumers, and U.S.
firms that use China as the final point of assembly for their products, or use Chinese-made inputs
for production in the United States, are able to lower costs. China is the largest foreign holder of
U.S. Treasury securities ($1.26 trillion as of September 2015). China’s purchases of U.S.
government debt help keep U.S. interest rates low.
Despite growing commercial ties, the bilateral economic relationship has become increasingly
complex and often fraught with tension. From the U.S. perspective, many trade tensions stem
from China’s incomplete transition to a free market economy. While China has significantly
liberalized its economic and trade regimes over the past three decades, it continues to maintain (or
has recently imposed) a number of state-directed policies that appear to distort trade and
investment flows. Major areas of concern expressed by U.S. policymakers and stakeholders
include China’s alleged widespread cyber economic espionage against U.S. firms; relatively poor
record of intellectual property rights (IPR) enforcement; discriminatory innovation policies;
mixed record on implementing its World Trade Organization (WTO) obligations; extensive use of
industrial policies (such as financial support of state-owned firms and trade and investment
barriers) in order to promote and protect industries favored by the government; and
interventionist policies to control the value of its currency. Many U.S. policymakers argue that
such policies negatively impact U.S. economic interests and have contributed to U.S. job losses.
There are a number of U.S. views on how to better address commercial disputes with China:
? Take a more aggressive stand against China, such as increasing the number of
dispute settlement cases brought against China in the WTO, or threatening to
impose trade sanctions against China unless it addresses policies, such as cyber
theft of U.S. business trade secrets, that hurt U.S. economic interests.
? Intensify negotiations through existing high-level bilateral dialogues, such as
summits between the two presidents, and the U.S.-China Strategic and Economic
Dialogue (S&ED), which was established to discuss long-term challenges in the
relationship. In addition, seek to complete ongoing U.S. negotiations with China
to reach a high-standard bilateral investment treaty (BIT), as well as to finalize
negotiations in the WTO toward achieving China’s accession to the Government
Procurement Agreement (GPA).
? Encourage China to join the Trans-Pacific Partnership (TPP) negotiations and/or
seek to negotiate a bilateral free trade agreement (FTA) with China, which would
require it to significantly reduce trade and investment barriers.
? Continue to press China to implement comprehensive economic reforms, such as
diminishing the role of the state in the economy and implementing policies to
boost domestic consumption, which, many economists contend, would benefit
both the Chinese and U.S. economies.
Here were some suggestions:
Take a more aggressive stand against China, such as increasing the number of
dispute settlement cases brought against China in the WTO, threatening to
impose trade sanctions against China unless it addresses policies (such as cyber
theft of U.S. trade secrets) that hurt U.S. economic interests, and making greater
use of U.S. trade remedy laws (such as anti-dumping and countervailing
measures) to address China’s “unfair” trade practices.
? Intensify negotiations through existing high-level bilateral dialogues, such as the
U.S.-China S&ED, which was established to discuss long-term challenges in the
relationship. In addition, seek to complete ongoing U.S. negotiations with China
to reach a high-standard BIT, as well as to finalize negotiations in the WTO
toward achieving China’s accession to the GPA. Continue to encourage China to
implement comprehensive economic reforms, such as diminishing the role of the
state in the economy and implementing policies to boost domestic consumption.
? Encourage China to join the Trans-Pacific Partnership (TPP) negotiations and/or
seek to negotiate a bilateral a free trade agreement (FTA) with China that would
require it to significantly improve IPR protection, lower trade and FDI barriers,
and adopt new disciplines on the treatment of SOEs.194
Author Contact Information
Wayne M. Morrison
Specialist in Asian Trade and Finance
wmorrison@crs.loc.gov, 7-7767 |
