U.S. Opens Trade Talks With China | WYPR

U.S. Opens Trade Talks With China

Jan 30, 2019
Originally published on January 31, 2019 12:09 am

The Trump administration opened high-stakes trade talks with China on Wednesday. The two sides have just over a month to reach an agreement, or risk an escalation in their costly trade battle.

The administration has already imposed tariffs on some $250 billion in Chinese imports. President Trump has threatened to increase and expand those tariffs, but he agreed to hold off until early March, while negotiators try to hammer out a deal.

Talks began on the White House campus Wednesday morning with U.S. Trade Representative Robert Lighthizer sitting across the table from Chinese Vice Premier Liu He. Liu is expected to meet with Trump on Thursday.

The president has often complained about the U.S. trade deficit with China — $335 billion in 2017 and on pace to surpass that for 2018. China has signaled a willingness to buy more American products, such as soybeans and natural gas. But American negotiators are looking for more structural changes in the trade relationship, including an end to China's intellectual property theft and the forced transfer of U.S. technology.

On Monday, the Justice Department unsealed an indictment against Chinese telecom giant Huawei, accusing the company of trying to steal trade secrets from the T-Mobile company.

While the administration says its prosecution of Huawei is not related to the trade talks, the case illustrates what authorities have described as a long-standing problem in China.

"We cannot tolerate a nation that steals the fruits of our brainpower," Assistant Attorney General John Demers told a Senate hearing in December. "The playbook is simple: rob, replicate and replace. Rob the American company of its intellectual property, replicate that technology and replace the American company in the Chinese market and, one day, in the global market."

Trade experts say China has begun to crack down on intellectual property theft as well as the forced transfer of technology.

"Will that be enough?" asked Mary Lovely, an economist at Syracuse University and former co-editor of the China Economic Review. "I don't know. But the Chinese have certainly signaled that they're willing to make structural reforms."

Commerce Secretary Wilbur Ross tried to temper expectations for any quick breakthrough in the talks, telling CNBC last week that the two sides are "miles and miles from getting a resolution."

But White House adviser Larry Kudlow sounded more optimistic.

"The scope of these talks will be the broadest and deepest in U.S.-China history," Kudlow told reporters. "We've never had anything this comprehensive. And I regard that as a big plus."

Lovely said the presence of China's vice premier at the bargaining table, and the anticipated meeting between Liu and Trump, are encouraging.

"Those certainly are signs that the parties believe that some type of deal could be done," she said, adding that an escalation in tariffs would be in no one's interest.

"A lot of the tariff revenue is coming out of American consumers' pockets," she said. "The tariff battle, I think, has been fairly mindless."

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MARY LOUISE KELLY, HOST:

The world's two biggest economies are trying to resolve a trade war that has rattled nerves and markets on both sides of the Pacific. The U.S. and China began a new round of trade talks today here in Washington. Negotiators have just over a month to make a deal or run the risk of more tariffs. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Photographers got a quick peek this morning as the high-level talks got underway in the diplomatic reception room next door to the White House. U.S. Trade Representative Robert Lighthizer sat on one side the polished conference table directly across from China's vice premier, Liu He. President Trump often complains about America's trade deficit with China, which has only grown in the last two years. White House economic adviser Larry Kudlow says one goal of these talks is a bigger opening for U.S. exports.

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LARRY KUDLOW: Give our people the chance to sell to China. We will export a ton. Our export sales will roar - roar.

HORSLEY: China has already signaled a willingness to buy more American goods such as soybeans and natural gas. But U.S. negotiators are also looking for more structural reforms, including an end to China's intellectual property theft and the forced transfer of American technology. On Monday, the Justice Department unsealed an indictment against the Chinese telecom giant Huawei, accusing that company of trying to steal trade secrets from an American firm, T-Mobile. While the administration says that criminal case is not related to these trade talks, it does illustrate a longstanding U.S. complaint about the way China does business.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN DEMERS: The playbook is simple - rob, replicate and replace.

HORSLEY: John Demers heads the Justice Department's National Security Division. At a Senate hearing last month, he described a deliberate Chinese strategy of economic espionage.

(SOUNDBITE OF ARCHIVED RECORDING)

DEMERS: Rob the American company of its intellectual property, replicate that technology and replace the American company in the Chinese market and, one day, in the global market.

HORSLEY: Syracuse economist Mary Lovely, who's a former editor of the China Economic Review, says Beijing has taken some steps to address the U.S. concerns. In recent months, China has increased penalties for stealing intellectual property and has moved to outlaw the forced transfer of technology.

MARY LOVELY: Will that be enough? I don't know. But the Chinese have certainly signaled that they're willing to make structural reforms.

HORSLEY: China has a history, however, of backsliding on such promises. So U.S. officials say whatever is agreed to will have to be enforceable. Commerce Secretary Wilbur Ross told CNBC both countries want to make a deal, but he doesn't expect any quick breakthroughs.

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WILBUR ROSS: We're miles and miles from getting a resolution. And, frankly, that shouldn't be too surprising.

HORSLEY: Still, Lovely sees some encouraging signals, including the presence of a high-ranking Chinese delegation here in Washington and the planned meeting tomorrow between Vice Premier Liu and President Trump.

LOVELY: Those certainly are signs that the parties believe that some type of deal could be done.

HORSLEY: The alternative could be costly unless there's a deal or at least an agreement to keep talking by the beginning of March. The administration has threatened to increase tariffs on some $200 billion worth of Chinese imports from 10 to 25 percent. Lovely says that wouldn't be good for anyone.

LOVELY: The tariff battle, I think, has been fairly mindless. A lot of the tariff revenue is coming out of American consumers' pockets.

HORSLEY: The administration says China is under pressure to make a deal because of its slowing economy, but American companies have also felt the pain of China's slowdown, and that could create pressure on U.S. negotiators as well. Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.