Allies crucial to American success trading with China
With the G7 summit in Charlevoix, Que., having concluded, the question of where the U.S. stands on trade policy has become a dominant topic of international discussion. When it comes to ongoing trade negotiations with the Chinese government, President Donald Trump is right to focus on China’s unfair trade practices.
China’s joint venture policies and foreign equity caps require companies to forgo control of their business to proceed with investments and operations. Intellectual property theft and forced technology transfers rob businesses of their innovative ideas.
U.S. companies and those of our allies are subject to unequal treatment in regulatory processes, along with restricted opportunities in government procurement. China also imposes additional barriers on various industries to tighten its grip on what Beijing considers strategic domestic sectors.
One approach to addressing these problems, advocated by some in the Trump administration, is to impose ever-growing tariffs on Chinese imports. Unfortunately, this stands little chance of success and would inflict the most harm on U.S. businesses and consumers.
The reality is there are rarely winners in trade wars. The main beneficiaries are countries that are not involved. Unfettered by tariffs or the stain of being labelled unreliable suppliers, neutral parties are positioned to fill the void. And if they meet, or exceed, consumer expectations they may permanently retain the market.
As it stands, China is America’s third-largest goods exports market, but this is only the tip of the iceberg. Which asks the question: how can the U.S. address China’s unfair actions without ceding the Chinese market to competitors?
On the domestic front, the administration can consider a range of non-tariff tools and innovative ideas, such as negotiating a bilateral trade agreement. Getting the Chinese to the negotiating table to discuss basic rules of the road would be a major achievement for the administration.
But, whether innovative ideas like a bilateral agreement are pursued or not, the short answer is this: the U.S. shouldn’t go it alone.
Since the Second World War, the U.S. has worked with its allies to implement trade agreements that open markets, and American workers have enjoyed the benefits. It must continue to do so. Today, international trade supports 36 million U.S. jobs, promotes the competitiveness of U.S. companies and delivers affordable, high- quality goods to consumers.
The World Trade Organization offers one arena. Already, Japan and Europe have signalled they will join the U.S. in challenging China’s treatment of foreign intellectual property through the WTO.
For decades, the U.S. has benefitted from strong relationships with its allies — from Canada to France to Japan — and we’ve seen the progress we can achieve together. By working with our allies at the G7, we can ensure businesses compete on a level playing field in China. After all, we all face the same trade and investment barriers in China. Together, we can succeed.
Bill Lane is executive director of Trade For America, a joint effort of Business Roundtable, the American Farm Bureau Federation, the National Association of Manufacturers and the U.S. Chamber of Commerce to highlight benefits of international trade.