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There has been a flurry of activity in the last few weeks as US trade negotiators attempted to meet the 90-day deadline set by President Trump to resolve US-China trade concerns. These talks came on the heels of a year of tit-for-tat tariff spats that continue to disrupt financial markets daily. Ultimately, the deadline proved too short and has been extended. It is clear, however, that President Trump needs a resolution to this issue, and fast, given his campaign promises and vaunts about his deal-making prowess.
United States Trade Representative Robert Lighthizer appeared before the House Ways and Means Committee this week to provide a glimpse into the progress of the trade talks, including which US-China enforcement mechanisms the administration is contemplating (discussed at length by my AEI colleague Derek Scissors). The question now is whether these talks, and the Trump Administration’s approach, will yield concrete results beyond the rather fruitless attempts that have defined US-China trade relations for the past 20 years.
In a joint Brookings Institution-AEI policy brief, which is part of a broader joint initiative, entitled “Rethinking Globalization,” Brookings Senior Fellow Josh Meltzer and I outline a multi-prong strategy, which includes partnering with allies and taking bilateral, multilateral, and unilateral actions to constitute positive next steps for this critical economic relationship. We argue that the US needs to stay true to its values and not be content with “fig leaf” deals or a managed trade relationship with China. Instead, any deal should address the real issues at hand in a free market manner, and strengthen the multilateral global trading system and rule of law that the US has championed in the post-World War II era.
Among these strategies, we highlight the critical role the World Trade Organization (WTO) could play — coupled with strong US leadership — in addressing US-China trade tensions, despite China’s spotty compliance with its WTO commitments and the fundamental challenges the institution has faced in the last several years. The WTO remains the only global trade institution that reflects core US values and provides a forum to discipline Chinese economic practices. The US and China should bring their differences back under this rules-based framework to create enforceable commitments and minimize the harm to the WTO as an institution.
If the current level of US-China trade tensions remain, bilateral trade and investment are likely to decrease, which would be a lose-lose for both sides. The US and China now have a unique opportunity to level the playing field between the world’s two largest economies. The result would be growth and prosperity for not only the US and China, but also the world economy and the global trading system.
You can read the full report here.
The US and China now have a unique opportunity to level the playing field between the world’s two largest economies. The result would be growth and prosperity for not only the US and China, but also the world economy and the global trading system.
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