Donald Trump is alienating allies the US needs to confront China on trade, panel warns

A US advisory commission urges a united front against Chinese policies, not unilateral action

PUBLISHED : Saturday, 09 June, 2018, 4:55am
UPDATED : Saturday, 09 June, 2018, 6:53am

US President Donald Trump must join with the EU, Japan and other allies to form a united front against China, an advisory panel warned on Friday, adding that his aggressive trade actions against long-time US partners could undermine that effort.

The comments came during a special meeting of the US-China Economic and Security Review Commission on in Washington.

Nearly all the participants in the meeting, held “to address Chinese market distortions”, called on the Trump administration to initiate “big, bold” actions together with Washington’s traditional partners within the World Trade Organisation (WTO) framework.

“The US should file a broad-based WTO dispute jointly alongside America’s economic allies, the countries with market-oriented systems that confront the same challenges posed by China,” said Chad Bown, a senior fellow at the Washington-based think tank Peterson Institute for International Economics.

“The European Union and Japan have indicated a willingness to engage as evidenced by joint trade ministerial statements issued in Buenos Aires in December 2017, in Brussels in March 2018 and just last week in Paris,” added Bown, who served on former President Barack Obama’s White House Council of Economic Advisers.

US lawmakers scramble to roll back Trump’s ZTE reopening deal

Commission members, including former Senator James Talent, a Missouri Republican, expressed support for unified WTO action against China.

“I like your big, bold approach,” Talent told Jennifer Hillman, a Georgetown Law School professor and former member of the WTO Appellate Body, who was also called to testify.

The warning about pursuing bilateral agreements with Beijing while antagonising strategic allies adds to the pressure on Trump, who is fighting bipartisan congressional action that seeks to undermine other areas of his China policy.

On Thursday, senators from both parties introduced legislation that would undo US Commerce Secretary Wilbur Ross’s plan to rescind sanctions against ZTE, the Chinese telecommunications equipment maker.

The bipartisan commission, which heard from four experts on Friday on the issue of a coordinated US policy response to “Chinese state capitalism”, was established by the US Congress in 2000 to monitor and investigate trade and national security matters involving China.

Another expert witness spoke of recent US tariff actions against Canada, the EU and China, referring to them by their section numbers.

“The biggest shortcoming of this administration’s recent 232 and 301 announcements is its failure to work with allies to coordinate action in a strategic fashion,” said Celeste Drake, trade and globalisation policy analyst for the AFL-CIO, the largest organised labour federation in the US.

Don’t forget the successes of US-China engagement amid today’s rivalry

The Section 232 action refers to tariffs Trump imposed this week on steel and aluminium imports, a move that affected Canadian and European producers more than those in China. Section 301 tariffs are directed specifically at Chinese imports and are due to come into effect on June 15.

“We support both actions,” Drake said, “but also believe they would be more effective and less likely to invite retaliation if they were executed with our allies instead of aiming at them.”

The Section 232 and 301 measures initiated by Ross “are inferior choices to a coalition-based WTO case because they all involve unilateral action by the United States”, Hillman said.

“Unilateral action is the most likely to attract retaliation from China and the least likely to get at the heart of the problem.

“Unilateral actions by the United States are most susceptible to the lure of a trade-off, of a short-term economic gain for additional sales of US goods, agricultural or services, to China without dealing with the crux of the problem.”

Soybean buy buoys China imports as Beijing tries to head off trade war

Linda Dempsey, the National Association of Manufacturers’ vice-president for international affairs and economic policy, also told the commissioners that it was crucial for the US to maintain its long-standing relationships while pursuing its trade goals.

“Work with our allies and trading partners that share a similar view remains vitally important,” she said.