Next Round of US-China Trade Talks to be Toughest Yet

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China’s fast-paced economic rise and flouting of globally accepted market rules — along with the growing economic fallout from COVID-19 — has put the US-China Phase II negotiations near the top of the critical issues facing the US postelection.

As detailed in a new report by the Committee for Economic Development of The Conference Board (CED), while the first phase of the US-China trade deal has eased tension, it also set the stage for discussions on the most contentious economic issues.

The Committee for Economic Development of The Conference Board (CED) is a nonprofit, nonpartisan, business-led public policy organization.

Points of dispute include forced technology transfers, cyber theft of intellectual property (IP), industrial policies, state subsidies, and new technology, according to The China Trade Challenge: Phase II.

“The Phase II negotiations will encompass critical challenges to both US national security and economic policies,” said Lori Esposito Murray, President of CED.  “Policymakers and trade officials will need to leverage all levers of US power to maintain the benefits of free and fair market competition, uphold the values that have stood the free-world community in good stead since World War II, and convince the Chinese that they have a stake in this system that propelled their advancement and growth.”

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U.S. trade with China since the 2000s

The new CED brief issued these recommendations for policymakers as they prepare for the second round of negotiations:

  • Establish a high-level Task Force to undertake a comprehensive “decoupling assessment” of US-China trade relations and dependencies.
  • Prior to launching the Phase II negotiations, reach a common understanding with allied advanced economies on a technology-security treaty.
  • Re-examine anti-monopoly rules that prevent industries from standing as one against Chinese government pressure.
  • Survey where and how US businesses and interests are restricted in China, and gradually ensure similar restrictions on China’s interest until it opens its economy in those spaces.
  • Ensure that China is held to global standards set forth in the WTO rules, which include opening its borders to foreign direct investment and to imported goods and services.
  • Unite the world trading community to repair, update, and upgrade the WTO treaty and all its related systems, especially enforcement procedures.
  • Treat IP theft and forced technology transfers as crossing “red lines” that will result in severe and immediate economic penalties.
  • Involve European, Japanese, Korean, and Australian representatives in pressing China to reform its cross-border trade and investment approach.
  • Immediately begin negotiating the US’s reentrance into the TPP-11 (now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP).
  • Where applicable, align tariffs with areas where Chinese state-sponsored entities are putting US firms and workers at peril.
  • Insist on “snap-back” provisions should China fail again to live up to its commitments.
us-china-tariffs-pesist-despite-the-phase-I-deal
Higher Us and China tariffs persist despite the Phase I deal

 


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