U.S. Trade Representative Robert Lighthizer said he’s “not foolish enough” to think one trade negotiation with China will change all allegedly unfair commercial practices.
Any deal concluded from U.S.-China talks is anticipated to include monthly, quarterly and twice-yearly enforcement meetings across various ranks of both governments, U.S. Trade Representative Robert Lighthizer told the House Ways and Means Committee Wednesday.
Lighthizer added during the full committee hearing that any bilateral deal resulting from current talks would be binding “to the extent that any agreement between nations is binding.”
If the U.S. and China conclude an agreement, there will be monthly meetings at the office director level, quarterly meetings at the vice ministerial level and semi-annual meetings at the ministerial level — consisting of Lighthizer and his Chinese vice premier counterpart, Lighthizer said.
“Individual companies will come to us with complaints about practices and we’ll be able to work those through the process,” he said. “In many cases, those are going to have to be anonymous because companies are afraid to come forward, because they know what’ll happen if they do, but they’ll have real-world effects that’ll be negative.”
In addition to individual companies’ complaints, the U.S. will consider any systemic problems and business patterns that the U.S. disagrees with and will “bring those through the process,” Lighthizer said.
Lighthizer hopes, in most cases, problems can be resolved at the first or second level, but will rise to the ministerial level if that’s not possible, he said.
If there’s disagreement at the ministerial level, the U.S. “would expect to act proportionately but unilaterally to insist on enforcement,” Lighthizer said.
“This is a fairly unique idea,” he said. “This is not something that has a lot of precedent, but without that sort of thing, to me, then we don’t have real commitments.”
Potentially indicating there are additional important aspects of the planned enforcement mechanism, Lighthizer noted he was providing details in “limited specificity.”
Asked by committee Chairman Richard Neal, D-Mass., whether he envisioned “one negotiated package” in the next few weeks that will resolve all of China’s structural issues, Lighthizer said, “I’m not foolish enough to think that there’s going to be one negotiation that’s going to change all of the practices of China or our relationship with them.”
But he added that the U.S. must reckon with the major problems of Chinese commercial practices, like large industrial subsidies and intellectual property protection practices, working specifically to preclude anti-market practices that are unfair to U.S. stakeholders.
Testifying before a Senate Small Business and Entrepreneurship Committee hearing Wednesday, Council on Foreign Relations senior fellow Brad Setser said it’s not yet clear how much progress the U.S. has made on such issues during trade talks with China.
He added that he suspects it will be difficult to negotiate an agreement that completely addresses U.S. concerns that China’s “party state is uniquely able to rig China’s domestic market.”
A successful deal would conclude with a bilateral signing, followed by a “long process” of Lighthizer working with Congress to ensure China lives up to its commitments, he said during the Ways and Means hearing.
“I believe other problems are going to arise, and they’re going to have to be dealt with,” he said. “I view this as a process. … This is the first time, I believe, that it’s been approached in this way, and it’s really the result of the creation of an enormous amount of leverage by the president.”
The U.S. has rolled out three tranches of Section 301 tariffs against China over the country’s alleged unfair commercial practices, including 25 percent tariffs across $50 billion worth of goods in 2017 import value and 10 percent tariffs across another $200 billion in goods in 2017 import value.
The 25 percent tariffs started in July and the 10 percent tariffs started in September.
The 10 percent tariffs had been set to increase to 25 percent on Friday, but President Donald Trump on Sunday tweeted that he was delaying the increase.
In accordance with Trump’s direction, the Office of the U.S. Trade Representative plans to publish a notice in the Federal Register this week to suspend the tariff increase until further notice, a USTR spokesperson said in an email.
After the non-binding House Appropriations Committee report attached to the recently enacted 2019 Consolidated Appropriations Act called for USTR to create an exclusion process for the $200 billion list, launching such a process is “something that we’re looking at,” Lighthizer said.
“Our view until now has been that we would have an exclusion process for the $50 billion, which was at 25 percent, [and for] the 10 percent … that there would not be an exclusion process,” he said.
Lighthizer noted that since the 10 percent tariffs started, there has been a 7 percent to 8 percent devaluation of the Chinese currency, tempering any negative effects of those tariffs.
USTR is in the process of issuing more exclusions associated with the 25 percent tariffs, he said.
According to the most recent records of exclusion requests, released Friday, USTR has issued 984 exclusions associated with the 25 percent tariffs, a number that hasn’t increased since December.
Lighthizer also clarified the statutory and legal processes under which U.S.-China talks are taking place.
U.S.-China talks fall outside of Trade Promotion Authority (TPA) requirements for trade agreements, as the Trump administration is using constitutional executive authority and Section 301 authority delegated by Congress through the Trade Act of 1974 to negotiate a hopeful deal with China, Lighthizer said.
“We’re not changing any tariff lines; we’re not using TPA,” he said. “This is a settlement of the 301 action, and it’s the president’s constitutional authority to enter into executive agreements.”
Expected U.S.-China enforcement framework laid out
