tv Washington Intl Trade Association Discussion on U.S.- China Trade Talks CSPAN April 26, 2019 1:37pm-3:03pm EDT
trade war notably farmers who are suffering from retaliatory tariffs from china and also canada and méxico and europe and elsewhere. but, you know, as i mentioned there's reason to be skeptical about these kinds of figures. first of all, justifying using out you know whether the u.s. economy has capacity to produce extra, you know, hundreds of billions of dollars of goods to send to china and economic sense the u.s. is already full of employment and so commitment,
you know, china, you may have allies like australia, purchases go from u.s. to china. even if purchases do happen, you mentioned here between one of the major goals that the trump administration had in launching this negotiation which adam has mentioned here which is encouraging tenants and the whole reason for launching the negotiation but when decide to go make purchases many of them will happen to freedom enterprises. many people i spoke to brought up the issue are these
purchases, therefore, reinforcing the role of the state rather than working towards that goal of making china more market-oriented economies. some of these purchases like in agricultural sector or energy sector will happen big on enterprises, in other sectors that are more private, for example, semiconductors which bob has written about, could lead to setting up system. if you can order, if china can order the purchases can be ordered to turned off. so there's very clear, you know, pluses and minuses, obviously the purchases will be welcome in the med west and agricultural communities, energy producers
and focused on them to reduce the trade deficit and, you know, to have this kind of eye-catching dollar figure may seem trade deal like a win but there's a basic contradiction and very other important structural reforms that may be pushing china. >> if i could turn to you, you wrote recently on the issue of the timing of when the united states and therefore china would roll back their tariffs, perhaps not the most complicated issue in the negotiation but one that is brought politically because you have china on the one hand and certain elements of the u.s. business community who are looking for more or less media rollback of tariffs while the administration and many in congress are saying, let's maintain the tariffs until we see firm implementation by china of these commitments.
how do you see this issue being addressed in the negotiation and can they find compromise? >> thank you. so i think the way to think about this is think about frit the chinese perspective. what does china get out of this deal? i mean, what? they get the u.s. off their backs, that's the big deal. their essential goal is to get tariffs rolled back, whatever concessions they will make, the u.s. isn't going to make anything that's comparable. so it is their goal, number one goal, from the u.s. perspective, just think about the way tariffs were imposed. first 50 billion in tariff were supposed to be the equivalent of -- or to compensate the u.s. for forced technology transfer that's been discontinued and
then the rest was basically trump -- the chinese retaliated. no we will put 200 billion and now $250 billion. there was no particular economic rationale for it. it was pure pressure, pure pressure tactics. so if you think about it in terms of rolling it back, that 50 billion-dollars, the tariffs on $50 billion worth of good is in their view -- i mean, it's sort of an industry. the u.s. companies are competing with china. that's not fair. and costing the u.s. $60 billion a year. we are going to protect u.s. industry by penalizing the chinese by $50 billion. that's going to be really -- that's going to take a lot because then lighthizer and presumably he will be able to
trump, called himself tariff man, to ral that back. the other 200 billion should be left as an issue. a lot of ways they could do it, they could, you know, x number of billion dollars for, you know, months or whatever, they could reduce 10% tariffs to 5% make them insignificant. they are fairly insignificant at this point, but, i mean, doesn't seem all that complicated but given that that is the main chinese, i don't think there's a more importantly political issue out there on the discussions. >> thanks, bob. james, let me turn to you, you had a great piece last week in the ft that talked about the enforcement mechanism and essentially that there's now an agreement at least in concept
for reciprocal unilateral enforcement, so each side ultimately will decide whether the other is complying with the agreement and if not, they can take retaliatory measures, reimpose tariffs. can you talk a little bit about how this mechanism is different from typical trade agreements, wto, third-party dispute settlement and the likelihood that you see this mechanism preventing a remerging of the tariff war?
[laughter] >> so issue of enforcement has been -- it kind of stems from the idea that, you know, china has in the past not fulfilled any of its promises or many of its promises made to u.s. officials and this time has to be absolutely different than it was in the past and talking about the need for a very strong and effective mechanism from the very beginning. actually the issue of existing tariffs in a way is enforcement mechanism on the front end, so that, you know, from the outset they want china to know that from their side won't appear until they've already made some very clear commitments. and -- and now, you know, the question of enforcement on the
back end, so once the deal is sort of supposedly implemented, what happens if there's a dispute, what happens if companies or the administration decides that china is abiding by it? and traditionally trade disputes are solved, solved, adjudicated either at the wto or through some kind of bilateral dispute settlement system which has been set up within the confines of the actual deal, so there's -- so we know the administration doesn't really believe in wto settlement system, doesn't believe it's effective, doesn't believe -- so that's been ruled out as a possibility. and we know this administration isn't keen on bilateral
mechanisms, it's by both sides, rule on disputes, you know, independent fashion. so that really leads -- leaves us where we are sort of today which is potentially if there's a dispute they'll be a series of negotiations between government officials on both sides and if you still can't agree, the u.s. and china have a right to sort of retaliate in punitive tariffs after the fact and -- and enforce that on their own, and i think in reality that doesn't take us very far from the status quo if you think what the u.s. has been doing in the last 18 months that's essentially what it has been doing. so it doesn't move us much along the status quo and that's part
of the problem because -- because essentially the level of uncertainty for businesses and the level of uncertainty hanging around the u.s.-china economic relationship is pretty much here to stay. just imagine that, you know, trump tweeting threatening new tariffs on the chinese if they don't do this or don't do that or implement this or self-implement that, i think that's a very real possibility even after a deal is done. we will put those tariffs back on and they'll be very little that chinese could really do about it. clearly the chinese and the u.s. had initially insisted on china foregoing rights to retaliation with its own tariffs or at wto
but that was sort of bridge too far for beijing and so it looks like the enforcement mechanism, he sort of outlined the possibility that it would, in fact, be reciprocal enforcement mechanism, that wouldn't take us much further than the status quo in terms of enforcement. and so the question is how much good faith will be in the relationship after the deal is done, how much good will to go and implement the provision. i think that's an open question. .. ..
we have got the issue from the table, structural reform, chinese purchases, tariff rollbacks, enforcement and now i could put a general question of how you see the talks playing out over the next four-six weeks what is the likelihood that the parties will reach agreement and how motivated are they agreement and what do you think the two or three most difficult issues are that have to be resolved? >> i will take a shot at it. if i may say one advertiser i'm not usually this is not the usual disposition but my colleague in beijing and i are arriving at the china site so you can go out and buy it in a year from now.
is has said several times that that four-week window and i think it's pretty clear that their goal is that when he comes here on may 8 to get a preliminary deal no idea whether they will pull it off and on that kind of schedule and have a signing around memorial day which is hard to figure out how they do it given that will be in japan at that particular moment but anyway, that is their goal. as we have seen a lot of trade negotiations with just administration but anything flipped and i think i guess would be there is ag 20 meeting at the end of june in japan and i would think that is a more likely time where there would be a signing agreement. that have some culinary before
that but in my view it as to the issues outstanding all of us have named them and it's the tariffs in the enforcement and some of the digital missions by cloud computing so there's a whole range of things and light heiser to our consternation keep things close to the and so it's hard to tell precisely what is holding it up but i think it's more that political level is not going and with the big trade delegation is in minutia which would indicate that it is the last sort of deal which would be again enforcement and tariffs a couple other. >> yeah, i would agree with bob that the greatest uncertainty is probably when they signed the agreement rather than if we do
see in trade negotiations and in this administration setting up of these deadlines and the deadlines repeatedly being pushed off because it's agonizing for trade reporters the matter it matters so much to anyone else whether or not it signed in may or june but i think there is a sorry motivation on both sides at this point to sign a deal and present them pretty clearly sees the stock market as a scoreboard for presidency and has seen over the past six months what threats of no deal will do to both of those economic indicators and i do think from the ministration is motivation clearly motivation from the chinese side as well to resolve these tensions that they continue to have and make a mutually benefit and even from robert light has always been
very tough on china clearly sees his mission here as getting the chinese to make concessions on issues as well as committing participation and at the end of the day he would have motivation to close this deal as well and not to have all his work fall apart here. the bigger issue -- i also agree with my colleagues here that really when the tariffs will come off the main certainty there is present from will give the last word on which and when the tariffs will come or how many will come off in one and obviously can be predictable and also the difficulties of settling on this for mechanism for the united states feels like it has the right to keep its authority and continue to hold
the threat of tariffs over china but they also feel like it did not agree to something that infringes on it 70 and finding the common ground there. >> i thank you also have to look at prism of 2020 and i think that is driving a lot of the administrations positioning on the issue and at least now light heiser is very clearly ideologically committed to changing china's behavior or even coupling some people for the us economy from china but china looks -- i think trump look at this from a very political viewpoint and if he can get china to start buying massive amounts of soybeans and pork and other things then i'm not sure whether we have the capacity to produce that much more but farmers have been hit
pretty hard by the tariffs and not just from china but from the coalition to still tariffs from canada and mexico and the flooding incomes and farmers are down so i think to have china followed some of those purchases if when a deal is reached and china they welcome that and there's a huge swine fever epidemic that is killing their herd of pork so they probably will be looking for new supply and things like that so i think there will be a lot of attention paid to how fast can try to ramp up these purchases but that gets to the point where you had a good situation with china and then how will you return to the status quo or is it the market share permanently depleted?
i think there's a lot of that i think this ministration has that they may be to get china to replace what they did not or what they were not buying. >> one thing that we really don't have a good grip on is what the real extent of the chinese concessions are on this course structural issues that adam talked about at the beginning. i tech transfer intake and all the rest and from the administration officials are saying there's a lot of progress made in the first round of negotiations insane there's been more had remade but actually there's very little concrete evidence of where the chinese have actually moved the needle very much so i think that's a
big? that is still hanging over the negotiations and it does make me wonder whether in the final stretch there's a chance that bob lighthizer to come back and say look, we just haven't been able to make some fudge and often this does not satisfy all the concerns raised in this investigation and if we can make a recommendation to trump not to take the deal which trump might say, get lost, we will do the deal anyway. but i think that is one thing that i think everyone needs to watch out for because also it means that if a deal struck that's fairly limited on these key issues than there could be a more serious backlash from congress and that could cause problems in the political level for trump. at the moment, trump is any real
sweet thought because you got the market have been rallying in the fears of the slowdown have used in is in this great position in which he can say he is negotiating a fantastic three deal but nobody really knows what is in it and there's just a few weeks away for the last two months. the reason may be why this has been suspended for so long is because being a few weeks away from a fantastic three deal is a great position for trump to be in and i think that will change in the dynamic will change once the deal is done and people see what is in it and the reactions starts moving in and it could be a big win for trump if you can say that he fulfilled campaign promises and there could be further values in the equity market and it could be lifted or
go the other way. people could say this is an empty deal mainly about purchases and uncertainty of that will linger in the markets could be disappointed by that. i think that trump is in the bit of a sweet spot at the moment but that will necessarily continue after the deal is done. >> let me pick up one other angle on the congressional reaction because james, he talked about how it could be criticized for being not tough enough on china and not achieving the structural reforms that they set out to achieve but now that we know these reforms will be bilateral obligations whether ip or other areas what is the risk that congress will be concerned about the
obligation that the us is entering into as they apply to the united states -- which as you say is a you rattle enforcement procedures so just for example ip provisions that might cause democrats concern about how china might use them against the united states or for republicans commitments related to currency minimization and china could use those against the united states. is there a riskier that could be part of the congressional reaction? >> yeah, i can take a stab at that. well, i'm sure that particularly democrats on the hill but probably also republicans will be coming through those 150 pages of the deal and looking for any signs of the agreement created obligations on the united states which might even require a change in the law and therefore that could open up whole discussion about whether the deal be approved by congress.
i think ambassador lighthizer is being knows that is being careful about what is written in the deal to stave off any kind of backlash of that nature. clearly when you're looking at the relationship abroad agreement i think one different [inaudible] is to see what the actual impact is on their interests and you will have winners and losers they think there will probably be some losers on the us side and will worry about the impact of the steel but will be fascinating to watch. >> i would add light heiser hypersensitive to your sovereignty and using that in the course of effort negotiations and fought to get the chapter taken out of the deal that would allow canada and mexico to challenge antidumping and decisions and