Chinese Vice President Xi Jinping’s visit to Washington this week was intended to reassure Americans about continuity in Beijing’s leadership. The Obama administration rolled out the welcome mat for Xi, who is soon to become China’s top leader. His message was stability in this time of transition.
Yet stability and continuity are the last things that characterize U.S.-China relations at this juncture. After pursuing a policy of cooperation and coordination with Beijing in its first two years in office, what then-Deputy Secretary of State James Steinberg called “strategic reassurance,” the White House has pushed the reset button.
In a much-touted “pivot” to Asia, the administration is hedging its bets on its relations with China, strengthening U.S. military ties with a string of nations on China’s periphery. In terms of trade, the White House has created an interagency enforcement center tasked with investigating unfair trading practices in countries such as China.
This new trade strategy for dealing with China is long overdue. For years, the Obama administration and its predecessors have played whack-a-mole with Beijing, episodically going after China’s most egregious individual trade offenses, often based on little more than an agenda determined by which American company or union screamed the loudest. There had been no apparent overriding goal or framing principles for such efforts.
The creation of the Enforcement Center gives Congress an opportunity to lay out some much-needed goals and principles—reciprocity, balance of benefits, and automaticity in enforcement—to guide the center’s work and set benchmarks for the White House as it resets U.S.-China trade relations.
The Obama administration has brought more major trade actions against China than any of its predecessors.
But this current litigation strategy, said Clyde Prestowitz, president of the Economic Strategy Institute, “maintains an illusion that all of these problems with China are a discrete deviation from agreed [World Trade Organization] norms. The trouble is they aren’t discrete, they are systemic. If the strike force is really serious, it needs to define the differences between our free-market system and their mercantilist system. Then we need a comprehensive strategy that is results-oriented.”
There is ample precedent for Congress to lead the way in outlining such a strategy. In the 1980s, the United States faced a similar trade challenge posed by Japan. Congress agitated, passing a series of trade measures culminating in the 1988 Trade Act that demanded a results-oriented approach to Japan. Congress mandated trade action against priority anticompetitive practices in what became known as “Super 301.” This congressional action forced the hand of a reluctant Reagan administration and the Bush 41 White House that succeeded it.
Today, Congress could instruct the administration to develop an inventory of alleged Chinese violations of its WTO commitments, which would then provide a road map to build WTO cases against Beijing.
The focus should be broad and systemic. “We need to get ahead of the problem,” said Michael Wessel, president of the Wessel Group and a longtime aide to former Rep. Richard Gephardt. “And we need to deal with it on a systemic, sectoral basis. For example, we shouldn’t be looking at radiators, but at the auto parts sector as whole.”
Congress could require that any surge in imports automatically trigger a preliminary government investigation. If the facts suggest substantive and persistent unfair trade practices, then the government could be required to automatically initiate a trade case. Such automaticity could actually give the White House greater leverage in dealing with the Chinese. The administration can say to Beijing: “You either deal with us or those crazies on Capitol Hill.”
The government’s ability to successfully pursue such cases could be bolstered by the right to compel private-sector cooperation through the production of evidence. Now, all too often, companies are reluctant to share what they know out of fear of Chinese retaliation. At the same time, the president could be granted the discretion not to pursue cases deemed not in the national interest.
The trade enforcement center’s ultimate effectiveness will be a product of the resources available to it. The Obama administration has asked for $26 million to fund such efforts. If it is unwilling to approve these additional funds, Congress could consider effectively privatizing the cases. The United States is currently one of just a handful of countries that still uses government lawyers to represent itself before the WTO. It may be time to change that policy, relying on private counsel working under the direction of U.S. Trade Representative lawyers and paid for by the affected interests.
Stronger trade enforcement in dealing with China will not be successful if it is an end in itself. Rebalancing Washington’s trade relationship with Beijing will require embedding enforcement in a broader recasting of the U.S.-China trade strategy. History teaches that administrations are reluctant to make such profound changes unless Congress forces them to do so.
Bruce Stokes is a senior transatlantic fellow at the German Marshall Fund in Washington, DC.
Image by the White House.