President Trump’s administration is pushing for a triple-tiered enforcement mechanism in a U.S.-China trade deal, backed by the threat of unilateral U.S. punishment, chief negotiator Robert E. Lighthizer told a House panel Wednesday.
Under the U.S. proposal, working-level officials would meet each month to consider complaints about Chinese practices from American businesses, including ones submitted anonymously to avoid stirring Beijing’s ire, Lighthizer said.
Those that couldn’t be resolved would pass to higher-level officials meeting quarterly and, if necessary, to Lighthizer and his Chinese counterpart, Vice Premier Liu He, who would confer twice a year.
The administration wants to reserve the right to act “unilaterally” at the conclusion of that months-long process by imposing tariffs or other punitive measures, Lighthizer said, adding: “We’ll insist on enforcement.”
After the hearing, he declined to comment on whether the Chinese were receptive to the idea.
China’s failure to fulfill scores of previous promises to strengthen intellectual property protections and allow U.S. firms access to key markets makes strong enforcement measures essential in any new deal, Lighthizer said.
The trade chief said he is seeking “real rules” to prevent Chinese authorities from requiring American businesses to surrender their technology secrets before doing business in China; intellectual property protections; and better access to key markets.
The president said on Friday that the United States had reached a “final agreement” to prevent Beijing from manipulating the yuan’s value to make its exports less expensive. But Lighthizer said that provision remains a work-in-progress until the entire trade deal is agreed.
“We are making headway on structural issues,” Lighthizer said, disputing reports that the two sides remain far apart on U.S. demands for major changes in China’s state-led economic system.
Still, a U.S.-China trade agreement will not be a cure-all for the commercial tensions stemming from Beijing’s pronounced intervention in its economy, he said.
“I’m not Pollyanna. I don’t believe this is going to solve all the problems between us and China,” Lighthizer told the House Ways and Means Committee.
“If we’re successful, there’ll be a signing. I believe other problems will arise that will have to be dealt with.”
Rep. Richard E. Neal, (D-Mass.), the panel chairman, said the president must hold out for a deal that includes structural changes in China’s economy. “The future of America’s economic prosperity is in the balance,” he said.
The veteran trade attorney also rejected a demand by Rep. Lloyd Doggett (D-Tex.) for the administration to seek congressional approval for a China deal. The president has constitutional authority to resolve trade disputes under a 1974 trade act and will not submit any China deal for lawmakers’ review, Lighthizer said.
Lighthizer’s appearance before the House Ways and Means Committee was his first on Capitol Hill since Democrats recaptured the House in November, complicating the outlook for the administration’s ambitious trade agenda.
Trump hopes to secure congressional approval this year of a new North American trade deal, the United States-Mexico-Canada Agreement, which Lighthizer described as his “top priority.” But many House Democrats are calling for renegotiation of provisions affecting a new class of drugs known as biologics, labor and the environment.
Lighthizer made a bid for Democratic support by praising House Speaker Nancy Pelosi for expressing doubts about the U.S. decision to allow China to join the World Trade Organization in 2001.
His testimony came amid mounting signs that Trump’s trade offensive is taking an economic toll. The monthly merchandise trade deficit in December rose to a record $79.5 billion, worse than economists expected, according to advance figures released by the Commerce Department Wednesday.
The report led economists at JPMorgan Chase, High-Frequency Economics and Pantheon Macroeconomics to trim their estimates of the economy’s annualized fourth-quarter growth rate to below 2 percent.
Trade tensions also are chilling the U.S. tourism industry, according to a new report from the U.K.-based World Travel and Tourism Council. The number of Chinese visitors arriving in the United States last year was flat after averaging annual growth of 23 percent for the past decade, the group said.
The president enjoys bipartisan support for confronting China, though lawmakers are nervous about the economic price that American businesses and consumers are paying.
Reflecting Republican concerns, Rep. Kevin Brady (R-Tex.) and Rep. Vern Buchanan (R-Fla.) released a letter to Neal arguing that any actions against China “must be narrowly targeted while minimizing any negative consequences on the United States.”
In a tweet earlier this week, the president said talks with the Chinese were “in advanced stages.”
The president is seeking a deal that shrinks the nation’s annual trade deficit with China, which is expected to top $400 billion once full-year results for 2018 are released, and that results in fundamental changes in China’s state-led development model.
After nearly a year of tough talk and action, Trump has vowed to deliver a trade agreement that is “better than any deal that anybody ever dreamed possible.”
To give negotiators more time, the president earlier this week canceled a planned March 2 increase to 25 percent from 10 percent in the tariffs on $200 billion worth of Chinese imports.
Lighthizer said his office will soon publish a Federal Register notice formalizing that decision.
Trump’s public comments about prospects for a deal have been growing increasingly positive in recent weeks. Before leaving Washington for his summit with North Korea leader Kim Jong Un, the president tweeted that a trade deal with China would mean “our great American Farmers will be treated better than they have ever been treated before!”
Chinese officials have offered to increase sharply their purchases of U.S. agricultural products such as soybeans and corn.