Let’s partner up for China trade reform

The recently unveiled U.S.-Mexico-Canada Agreement would update one of the most important free trade agreements in U.S. history. While there are still hurdles to clear before the USMCA is implemented, attention to ongoing trade negotiations now focuses on China and tariffs.

The Trump administration has rightly called out China’s discriminatory trade practices but has sought to address these issues through the unilateral imposition of tariffs, hurting Texas and broader U.S. economic interests.

Earlier this year, the U.S. imposed tariffs on $50 billion worth of imports from China, and China retaliated with equal force. American workers in impacted industries are seeing their jobs threatened or lost. American farmers are seeing foreign markets for their crops shrink or vanish. American companies of all sizes are reconsidering or abandoning plans for job growth and capital investments. And American consumers and manufacturers are seeing price increases in their purchases of imported and U.S.-made products.

With more than $16 billion in Texas goods and services exported to China, tariffs hurt Texas businesses, manufacturers, farmers and ranchers that rely on access to these markets.

The administration has since imposed tariffs on an additional $200 billion worth of Chinese imports, and China has hit back with tariffs on an additional $60 billion worth of U.S. exports. This escalation threatens further harm to U.S. businesses, farmers and workers.

Yet, the administration may be moving in a more positive direction on other trade fronts with countries that face the same challenges with China. This includes its deal with Mexico and Canada, the European Union and Japan.

Instead of imposing unilateral tariffs on China, the administration should partner with such like-minded countries to maximize pressure for Chinese economic reforms that ensure fair participation in its market. Three key points support such an allied approach.

First, U.S. allies share our concerns over China’s discriminatory trade practices and have demonstrated their willingness to act together, not unilaterally. Japan filed to join the U.S. World Trade Organization complaint against China over intellectual property rights violations in April. The EU similarly submitted a WTO complaint in June against China’s technology transfer policies.

Second, U.S. efforts with allies will be more effective and will ensure Chinese reforms are durable. If the administration acts in concert with allies through the WTO and other avenues, it will increase pressure on China to reform and open its economy over time.

Finally, working in concert with our allies will mitigate the risk of U.S. companies active in China being singled out for retaliation. It also will ensure foreign companies do not gain market share in China at the expense of U.S. firms.

We agree with the administration that China must implement significant market reforms. That’s why the four organizations that founded Trade for America — representing U.S. businesses and farmers of all sizes that employ millions of American workers — are advocating for constructive approaches to these issues.

Business Roundtable submitted recommendations to the administration on reforms to liberalize the Chinese market and ensure fair treatment of American companies in China. The National Association of Manufacturers released a framework of negotiating objectives for a bilateral trade deal with China, focused on ending unfairness, protecting U.S. assets and raising standards.

The U.S. Chamber of Commerce has called for the United States to work with our allies to forge new trade agreements that guard against China’s state capitalism. And new trade agreements with Japan, the EU and growing economies in Africa, Asia and Central America are what the American Farm Bureau Federation has advocated for as a part of resolving trade conflicts.

Applying coordinated pressure with trading partners on a country is a viable and proven strategy for results.