U.S.-China Trade Deal on Track, Lighthizer Says

Date: Thursday, June 18, 2020
Source: The Wall Street Journal

The U.S. Trade Representative says friction over China’s crackdown on Hong Kong’s autonomy and its falling behind on purchases of U.S. goods haven’t weakened the accord

WASHINGTON—The U.S.-China trade deal shows no signs of weakening despite clashes between the two nations over the coronavirus pandemic, China’s crackdown on Hong Kong’s autonomy, and China’s falling behind on purchases of U.S. goods, U.S. Trade Representative Robert Lighthizer said Wednesday.

“Every indication is that in spite of this Covid-19, they are going to do what they say,” Mr. Lighthizer said of China in a hearing before the House Ways and Means Committee. “We have an excellent agreement.”

When pressed on the broader range of U.S.-China issues, Mr. Lighthizer signaled he didn’t anticipate that they would affect the trade deal.

“If I try to solve all the problems between the U.S. and China, I’m going to end up not solving any of them,” Mr. Lighthizer said. “I have an obligation to operate in the trade space.”

China is far behind on its targeted purchases of U.S. goods under the trade deal signed in January, although it is nonetheless a relative bright spot in U.S. trade as the world economy takes a hit from the coronavirus pandemic. The U.S. also retains tariffs on about $360 billion worth of imports from China. That has been a sore spot for the U.S. importers who must foot the bill.

Mr. Lighthizer said, however, that trade data so far this year don’t account for substantial amounts of Chinese purchase contracts that have been agreed to and not yet carried out. He said it was also too early to judge the amount of purchases since the deal took effect only Feb. 15 and large purchases take time to be fully executed.

During the hearing, Mr. Lighthizer called for more tariffs—not fewer—on China-made medical equipment and protective gear that has been used in hospitals to treat people sick with the disease called by the coronavirus. Keeping tariffs on those products would encourage U.S. manufacturers to begin making those products, which could make the country more prepared for another public-health crisis, he said.

“I’m a firm believer that the things we need to fight this and the next pandemic should be made in America,” he said. In remarks before the Senate Finance Committee later in the day, Mr. Lighthizer clarified that he intended for his remarks to refer to tariffs “down the road as an incentive to get there. I’m not talking about doing it now.” 

While President Trump’s trade ambitions have taken something of a back seat while attention turned to the coronavirus pandemic, the administration still has a range of unresolved trade issues on its plate, and Mr. Lighthizer’s hearing was an opportunity for him to provide an update on many of the items on the U.S. trade agenda.

Trade tensions remain elevated with the European Union. While the administration has struck deals with Mexico, Canada, Japan and China, years of talks with Brussels have gone nowhere.

“Right now I would say it’s not looking good in the short run, although ultimately we have to get something worked out with Europe,” Mr. Lighthizer said, adding that the administration wouldn’t shy away from the use of further tariffs. “The president will use tariffs if he has to to get a fair shake for American businesses.”

The U.S. has imposed tariffs on European imports as part of a long-running dispute over subsidies for the aircraft manufacturers Boeing and Airbus. The American side won a key ruling at the World Trade Organization last year, which allowed the U.S. to hit about $7.5 billion of goods with tariffs. The EU is expected to win a parallel case later this year and could respond with tariffs of its own if no deal is worked out.

Earlier this month, Mr. Lighthizer’s office launched formal investigations against nine countries, as well as the EU as a bloc, because of taxes that fall heavily on U.S. tech companies. The investigations are the precursor to tariffs; the administration previously used the same strategy to threaten France with tariffs on $2.4 billion of goods. Mr. Lighthizer said Wednesday he believed the U.S. would likely move forward with the tariffs if the taxes aren’t abandoned.

The U.S.-Mexico-Canada Agreement is set to enter into effect on July 1, which will set off a scramble as companies hurry into compliance. Mr. Lighthizer said the U.S. wouldn’t hesitate to enter dispute settlement if Mexico fails to live up to its commitments to increase labor standards, or if Canada fails to open its dairy market for U.S. producers.

Rounding out the major items on the agenda, the U.S. and U.K. are working to negotiate a trade deal now that the U.K. has left the EU, and the two sides have laid out an aggressive timeline of agreeing to an accord this year.

Mr. Lighthizer, however, said that he thought a deal was unlikely to be presented to Congress before November and said that some issues, in particular agricultural standards, were likely to be difficult to resolve.

 

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