Trump push for China trade reform draws wide support at home, abroad
By David Lawder, Philip Blenkinsop and Michael Martina
WASHINGTON/BRUSSELS/BEIJING, March 25 (Reuters) - U.S.
President Donald Trump's blunt-force use of tariffs in pursuing
his "America First" trade agenda has angered many, from company
executives to allied governments and members of both parties of
But there's one effort which has drawn broad support from
those who oppose him on almost everything else - his push to
force Beijing to change what are widely viewed as China's
market-distorting trade and subsidy practices.
As U.S.-China talks to end a trade war reach their endgame,
politicians, executives and foreign diplomats are urging Trump
and his team to hold out for meaningful structural reforms in
China to address entrenched problems in the relationship that
hurt U.S. and other foreign companies and workers.
Trump's trade war "has let the genie out of the bottle" by
lifting expectations that the trade war will force China to
reform policies that businesses and foreign governments regard
as unfair, said Steven Gardon, vice president of indirect taxes
and customs at Lear Corp. Gardon's firm is an automotive
seating and electrical supplier with plants in 39 countries,
including the United States and China.
"Now that all these issues have been raised, there's a lot
more domestic political support to address these issues, and I
don't think you can pull back from that," Gardon said at a
Georgetown Law School forum this month. "There's now pressure
politically that they have to be addressed for the long term."
Gardon's comments reflect a broad shift in U.S. and
international business sentiment towards China's economic and
trade policies, one that is aligned with Trump's goals, if not
Trump's trade team say they are in the final stages of
negotiating what would be the biggest economic policy agreement
with China in decades. U.S. Trade Representative Robert
Lighthizer and Treasury Secretary Steven Mnuchin head to Beijing
this week to try to accelerate talks with Chinese Vice Premier
Liu He. Liu is set to travel to Washington for another round of
negotiations in early April.
Eight months into the trade war that has disrupted the flow
of billions of dollars of goods between the world's two largest
economies, it is unclear if a deal acceptable to both sides can
China's President Xi Jinping is seen as reluctant to make
economic reforms under pressure from the United States, and
Trump has said he may keep tariffs on Chinese goods in place for
"a substantial period" even if a deal is struck.
Xi may find it easier to live with the tariffs Trump has
imposed on trade than to change China's model for economic
As part of a deal, Beijing has offered to make big-ticket
purchases from the United States to help reduce a record trade
gap. Trump's team has said those purchases would be worth more
than a trillion dollars over about six years.
While big Chinese purchases might be tempting for Trump's
administration, they would do nothing to address what U.S. firms
competing in China or against Chinese firms say are structural
problems with a system stacked against them.
The United States complains China engages in systematic
intellectual property theft, forces foreign firms to give up
trade secrets for market access and spends huge sums subsidizing
its own industry. Redressing those complaints would require
policy reform at the highest level from Xi and China's ruling
A survey released by the American Chamber of Commerce in
China in late February showed that a majority of member U.S.
companies supported increasing or maintaining tariffs on Chinese
goods, and nearly twice as many as last year want the U.S.
government to push Beijing harder to create a level playing
The U.S. tariff demands have even encouraged some
reform-minded Chinese officials and private-sector business
executives to call for a faster pace of reform in China as it
celebrates the 40th anniversary of its first steps toward
Lighthizer told lawmakers in late February that
Chinese-American business people in particular have urged him to
"hang tough" in the talks and not to "sell out for soybeans."
STAY THE COURSE
When Trump delayed a threatened tariff increase well before
a March 1 deadline for a deal, he stoked fears that he may be
swayed by the big purchase order and leave longstanding
structural problems unresolved.
Since then, a steady drumbeat of lobbyists, company
executives, foreign diplomats and U.S. lawmakers from both
parties have urged Trump to stay the course on his structural
Representative Kevin Brady of Texas, one of the most
pro-trade Republicans and a critic of Trump's tariffs, recently
joined that call.
"While we want China to buy more U.S. goods ... it's even
more important for us to hold China accountable to meeting high
international standards on intellectual property rights,
subsidization, overcapacity, and the other structural ways in
which China distorts the global economy," he said at a House
Ways and Means Committee hearing just days after the tariff
delay was announced.
Last week, Senate Democratic leader Chuck Schumer, a
longtime China trade hawk, took to the Senate floor to urge
Trump not to "back down" and take a deal based largely on
Chinese purchases of American soybeans and other goods.
On Thursday, Schumer tweeted: "Now's not the time to drop
$200B in tariffs just because China's close to a deal,
QUIETLY ROOTING FOR TRUMP
European Union members, traditional allies of the United
States, are still smarting about the steel and aluminum tariffs
Trump imposed on imports into the United States last year. The
EU is also worried that Trump will impose duties on autos. But
the bloc shares many of the same frustrations over China's
technology transfer policies and market access constraints.
"We get complaints every day from our companies," one
European official told Reuters in Beijing, noting that despite
repeated pledges from the Chinese government to make life easier
for foreign companies, little had changed.
EU trade commissioner Cecilia Malmstrom's assessment of
China's behavior sounds almost like it was written by the U.S.
Trade Representative's office, charging that China has abused
global trading rules.
China has "blurred the lines between state and private
sector. The state has undue influence," she said in a Washington
speech this month. "Intellectual properties of companies are
stolen. State subsidies, direct or indirect, are common. And
these impacts are felt at home and abroad."
Malmstrom says that while the U.S. and EU "agree on the
diagnosis," they differ on tactics, and she argues for a more
multilateral approach, citing the EU's work with the United
States and Japan to address the issues through reform of World
Trade Organization rules.
Some worry that Europe could lose out if Washington and
Beijing strike a deal to purchase billions of dollars more in
products to try to shrink the U.S. goods trade deficit with
"If China is buying more from America then inevitably it
will buy less from Europe," a second European official based in
Beijing said, adding that could in particular affect large
But European diplomats and officials acknowledge a
begrudging support for Trump's goals, even if they are repulsed
by his blunt tactics. Many are secretly rooting for his success.
"We are against unilateral measures, but nobody is exactly
sorry for China. On content we think he does have a point," said
one EU diplomat who spoke on condition of anonymity in Brussels.
"Beijing has to understand that without reform, the system could
just stop working."
Trump administration officials insist that he has gotten the
message and is holding out for "structural changes" to the
U.S.-China relationship, along with an enforcement mechanism
that holds China to its pledges.
Clete Willems, a White House trade adviser, told the
Georgetown Law School forum that Trump is determined to fix
problems with China's trade relationship that he has railed
against for years, long before he ever sought office.
"The notion that he's just going to suddenly accept a bad
deal is totally inaccurate. The president is going to walk away
from bad deals," said Willems, who announced on Friday that he
is leaving the White House for family reasons.
(Reporting by David Lawder
Editing by Simon Webb and James Dalgleish)
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