By Chris Clayton
DTN Ag Policy Editor
OMAHA (DTN) — U.S. Trade Representative Robert Lighthizer told members of the House Ways & Means Committee on Wednesday that trade talks with China had reached a point of agreeing on enforcement mechanisms that would allow a trade deal to go forward.
“What the president wants is an agreement that, No. 1, is enforceable, Lighthizer said. He later added, “Certainly, it is an objective of the Chinese that the tariffs go away.”
Lighthizer also cited farmers and biotechnology issues in his hearing with lawmakers, saying U.S. farmers should be selling significantly more products into China. Talks continue on how to speed up the process in China for approving biotechnology traits and basing those decisions on science, the trade ambassador said. Because farmers don’t want to plant seeds for crops that aren’t approved by trading partners, this basically stagnates the technology and improved crop production.
“We spent a lot of time on that, and hopefully we have made some headway,” Lighthizer said.
GOP lawmakers repeatedly said farmers in their districts are hurting from the trade dispute, but Republicans said farmers back President Donald Trump and his efforts.
Lighthizer said farmers follow the trade negotiations a lot closer than most Americans. “And when I talk to them, they are like ‘Hang tough. Don’t go for the soybean solution, go for structural change. This is our one chance,’” Lighthizer said.
Lighthizer later added, “You can’t talk to the president about trade without the farmers coming up.”
Beyond simply getting back the soybean market, Lighthizer said, negotiations should bring higher exports for other agricultural products going to China once an agreement is reached and tariffs come off.
“They (U.S. farmers) are in a position where they should have enormous markets in China,” Lighthizer said. “There is a much bigger market there, and with any kind of fair trade, the farmers would be beneficiaries there too.”
Trade talks were supposed to wrap up this week, or President Trump had threatened to bump up tariffs on Chinese goods from 10% to 25%. But, over the weekend, the president tweeted he would give the talks more time.
The U.S. has imposed a 25% tariff on $50 billion in Chinese goods and a 10% tariff on $200 billion more in goods. China has retaliated with tariffs on $110 billion on U.S. goods, including 25% retaliatory tariffs on soybeans and 62% tariffs on pork.
The president tweeted Sunday: “I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”
Lighthizer told lawmakers several fundamental challenges remain in the negotiations. China’s economy “remains fundamentally state directed.” Five-year and 10-year plans outline development goals, foster national champions in business and encourage the takeover of technological improvements, Lighthizer said.
And Chinese officials have sought to avoid hard conversations around intellectual property theft and subsidized state-run enterprises by instead offering to buy large quantities of U.S. products, such as soybeans, natural gas and aircraft, which were initial promises in May. China is again making “very large commitments” for commodity buys, as U.S. officials cited an offer last week by China to buy 10 million metric tons (367 million bushels) of soybeans.
The U.S. Trade Representative made it clear through several statements that one deal won’t solve all the issues with China and the U.S. has to be ready to return to unilateral actions such as tariffs to hold China to any trade agreement that is reached.
“This will be a binding agreement to the extent any agreement between nations is binding,” Lighthizer said.
In the past, China’s central government has said agreements between two countries on technology theft or other trade issues cannot be enforced at lower levels of government, such as provincial or local levels. Lighthizer said the U.S. has stressed any agreement must be enforced at all levels of the Chinese government.
“What we want is fair trade that requires structural change and it has to be enforceable,” Lighthizer said. “We have to approach this with the view that there are reformers in China who want to change these practices.”
Then Lighthizer cautioned: “I’m not foolish enough to think that there is going to be one negotiation and it’s going to change all of the practices of China or our relationship with them. I don’t believe that.”
To enforce a trade agreement, Lighthizer said, future U.S. administrations also have to be willing to again impose tariffs on Chinese products if China doesn’t uphold its end of the agreement when it comes to intellectual property theft and requiring U.S. companies to turn over technology just to do business in China.
Lighthizer said the U.S. has to take on the issues it has raised, especially when it comes to theft of intellectual property and forced technology transfer for companies to do business in China.
Rep. Devin Nunes, R-Calif., said that, in his past stint as chairman of the House Intelligence Committee, the committee was frequently briefed about the Chinese increasingly moving to take over communications systems around the world, while increasing military installations, and targeting specific industries for to buy.
“They are actively on a daily basis stealing intellectual property here in the United States to compete directly against us and our allies around the world,” Nunes said.
Highlighting the growth of technology in every industry, Lighthizer turned to agriculture, saying, “If you get into a modern combine, it’s like a spaceship was in the ’60s.”
The problem is that China invests in a company, that company develops technology and it ends up in China, Lighthizer added.
Lighthizer also disputed views from Democrats, such as Rep. Lloyd Doggett, D-Texas, that a trade agreement with China would have to be submitted to Congress.
“We have no intention of submitting it to Congress,” Lighthizer said. “It is an executive agreement. We are not sending it to Congress.”
Lighthizer said the trade talks are the settlement of a 301 investigation into unfair trade practices by China that led to tariffs.
“We’re not changing any tariff lines, and we’re not using TPA (Trade Promotion Authority),” Lighthizer added. “This is a settlement of a 301 action.”
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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