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USTR Lighthizer: China an 'unprecedented' threat to world trading system

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China represents an "unprecedented" threat to the world trading system, a threat that current world trade structures like the WTO are not equipped to handle, according to US Trade Representative Robert Lighthizer.

"China is a threat to the world trading system that is unprecedented," Lighthizer told the Center for Strategic and International Studies in wide-ranging remarks on trade and the administration's views on trade policy. The US needs to "make it expensive" for China and other trading partners "to engage in non-economic behavior" that hurts American companies and workers.

“The sheer scale of their coordinated effort to develop their economy, to subsidize, to create national champions, to force technology transfers and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented," he remarked.

While admitting that macroeconomic developments are factors in the US trade deficit, Lighthizer said the administration was still looking at all trade agreements the US has to bring trade more into balance.

"China is a threat to the world trading system that is unprecedented." US Trade Representative Robert Lighthizer.

The Section 301 investigation into Chinese practices on technology could result in a formal complaint at the WTO even as Lighthizer also signaled the world trade body was not well equipped to handle China and he sought to downplay the potential for positive results out of an upcoming ministerial meeting.

"If we turn up WTO violations, we'll bring them to the WTO," Lighthizer stated. "We're not precluded from doing that, by any means."

Section 301 has not been widely used since the formation of the WTO and Lighthizer said it would only take unilateral actions if the investigation finds some discriminatory Chinese practice not covered by an existing WTO agreement. "If there are things that are not covered by trade agreements that we think are unreasonable and restrain U.S. trade, then we'll try to devise other remedies," he said.

USTR will gather the facts in their investigation, Lighthizer said, "decide what the situation is, and, if necessary, recommend a remedy to the president."

As for the WTO, Lighthizer said he doubted the biennial meeting in Buenos Aires in December will result in any breakthroughs. "Our view is that it's unlikely that the ministerial in Buenos Aires is going to lead to negotiated outcomes," he commented. "There are a number of areas where we would be willing to engage, but there seems to be something blocking it in every case."

He also railed against dispute settlement provisions, saying there were "numerous examples” of WTO cases that have “diminished what we bargained for or imposed obligations that we do not believe we agreed to."

NAFTA to nowhere? Lighthizer also signaled some doubt that the NAFTA 2.0 talks with Canada and Mexico will come to a successful conclusion. "We're moving at warp speed, but we don't know whether we're going to get to a conclusion," he stated. "That's the problem. We're running very quickly somewhere."

Still, getting the talks done by year-end is a goal as "the alternative is you would stretch this out for a period of years and you would have a real negative effect, unintended collateral damage, negative effects on real people selling products," he stated.

Agriculture did figure into his comments on the trade deal, a sector that has benefitted from the pact. The uncertainty from the NAFTA 2.0 talks is "having real-life effects on farmers and ranchers and business people who are trying to do business, particularly in the United States and Mexico, but also in Canada."

However, a potential provision in the US plan for the talks – a sunset of the agreement after five years – was not a topic Lighthizer chose to discuss. "I'm not going to talk about any provisions that are out there that may be in this agreement, in the NAFTA agreement," Lighthizer said when asked about the matter.

PERSPECTIVE: Lighthizer touched on a lot of trade issues in his remarks, making clear the hawkish tone on trade is still present within the administration. It is interesting that while he was critical of the WTO on several fronts, it is still a route the US will use to pursue issues with China and others. So while the hawkish tone is there, there is at least an acknowledgement that the US just cannot go on its own to seek trade remedies even though the current administration is not enamored with the WTO. As for the NAFTA 2.0 talks, Lighthizer is either deploying negotiating skills in downplaying expectations for a positive outcome or the top trade official truly is not sure there will be a successful result. But one common thread ran through all of his remarks – the tough talk on trade will continue from the Trump administration.




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