CSIS political economy analyst tells Senate Foreign Relations Committee panel that more federal coordination with smaller governments would help counter an international rise in state capitalist policies.
As China and other countries advance economic models of state-run capitalism, a trade analyst on Wednesday said he is working on suggestions for how the U.S. government can coordinate with state and local governments to deal with the impacts of other countries’ predatory business practices.
“One of the lessons I learned in the last election, the debate on both sides about our position in the world was so deeply linked to what was happening on the ground, in local communities and in the economies of states and localities,” Center for Strategic and International Studies (CSIS) Simon Chair in Political Economy Matthew Goodman said during a Senate hearing. “We need to understand those local challenges and problems.”
He indicated CSIS is starting a line of work to look into such issues and is trying to make connections with governors, mayors and community leaders to get a micro-level perspective on how international predatory economic practices are affecting workers.
Sen. Todd Young, R-Ind., chairman of the Senate Foreign Relations Subcommittee on Multilateral International Development, Multilateral Institutions, and International Economic, Energy, and Environmental Policy, during a hearing of his panel on Wednesday said the United States is facing a potential “international predatory economic policy domino,” in that several countries, including Brazil and India, appear to be replicating Chinese state capitalist practices to boost their competitiveness.
Information Technology Innovation Foundation President Robert Atkinson said U.S. diplomats should be engaging more with burgeoning economic powers to suggest investments in research, skills training and intellectual property rights. He added that he is concerned about a currently under-resourced State Department and that he recently traveled to Brazil to promote free market principles at State’s request.
Michael Wessel, a commissioner on the U.S.-China Economic and Security Review Commission, said the Trump administration’s approach toward combating China’s predatory economic practices is necessary to prevent the spread of state-run capitalism. He added that India and other countries have been able to “get away with” unfair commercial practices “because there has been no real response from the U.S.”
The Office of the U.S. Trade Representative (USTR) on March 22 released a 215-page report detailing several affirmative findings of unfair commercial practices by China pursuant to an investigation under Section 301 of the Trade Act of 1974.
The report resulted in President Donald Trump recommending tariffs on $50 billion to $60 billion worth of imports from China.
USTR is accepting comments on the proposed tariffs through Friday and will host an interagency public hearing on Tuesday at the International Trade Commission before deciding whether and what tariffs are to be finalized.
Subcommittee ranking member Jeff Merkley, D-Ore., pointed out a general disparity between the United States’ and China’s tariff rates, including on average agricultural tariffs and automotive tariffs, and called for more reciprocity between the countries on tariff rates.
“The auto tariff differential is 25 percent versus two-and-a-half percent,” Merkley said. “Wouldn’t it kind of catch their attention if we said we’re going to invoke reciprocity?”
Reciprocity is one of many sticks that can be used to get China’s attention, Atkinson said.
“The fact that we have set up a system where we continue to give them far more tariff [concessions] in our market than vice versa says something is wrong,” he said.
The goal of reciprocity should be to reduce tariffs, Goodman said.
“They shouldn’t have 25 percent tariffs on automobiles,” he said. “I personally feel a little uncomfortable saying we ought to be as restrictive as they are. The goal of reciprocity should be to get them up to our level of openness. … As a means to an end, we may need to direct to do things to get their attention, as [Merkley] said, but the goal should be to bring down their tariffs and other barriers to advanced country levels.”
Analyst: Enlist states to combat global practices
