Trade Deal: Thank Goodness China Showed Their Hand

September 09, 2019

Section 301 Tariffs on China, Part 1

Editor’s note: Part One of a series on the Section 301 tariffs on Chinese products by CPA Buy American Committee co-chair James Stuber.

[James Stuber | August 6, 2019 | The American Dossier| Part one of a four-part series]

After twenty-five years of giving American technology, capital, and consumer purchasing power to China, top Trump administration officials thought they had negotiated an agreement for China to change its ways. China’s use of forced technology transfers, non-recognition of intellectual property rights, theft of trade secrets, and use of state-owned enterprises, subsidies, and restrictions on imports and foreign investment all were to be foregone by changes to Chinese law. Furthermore, adherence to these changes would be enforceable through sanctions built into the 150-page trade agreement.

Then, on May 3, 2019, the American side received a diplomatic cable in which these provisions were systematically stripped from the agreement. The result has been U.S. imposition of tariffs on $250 billion in Chinese imports, and the recent announcement of tariffs on an additional $300 billion, effective September 1st.

What went wrong? In my view the failure to conclude the agreement can be traced to two kinds of naivete on the part of the Americans. The first is the assumption that agreements, once negotiated, would be abided by. This is not the Chinese way.

The second is a failure to appreciate that the be-all and end-all of Chinese policy is to keep the Chinese Communist Party in control. The CCP has stayed in power through use of the very economic tools they were ostensibly giving up in the agreement. Faced with the prospect of actually changing their laws to do so, the Politburo told Xi Jinping they could not. And Xi could not go forward without the Party leadership’s consent.

The real danger here is not the tariffs, it is the prospect of signing an agreement the Chinese would never keep and enduring another 25 years of economic losses while building up our adversary. Thank goodness the Chinese showed their hand.

Read the original article here

Read part two of the four part series here

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