Engaging discussion on U.S. – Chinese trade at Georgetown on the Hill; video available

Posted by on September 24th, 2013, 3:39 pm


On Tuesday, September 17th the Center hosted a forum, “China Trade and Investment Policy: Shifting Winds?,” in the Rayburn building as part of its Georgetown on the Hill, Trade series.  The event drew an at-capacity audience of Hill staff, students, academics, business people and press for an engaging discussion on the current state of trade policy between China and the U.S.

Claire Reade, Assistant U.S. Trade Representative for China Affairs, Office of the U.S. Trade Representative, discussed the bilateral mechanisms that the U.S. utilizes in its formation of trade policy with China: strategic and economic dialogue and a joint commission on commerce and trade (JCCT).  The fact sheet for the JCCT can be found here.  She stated that the latter of these mechanisms picks up on the themes that the U.S. believes are priorities: government procurement, intellectual property protection, market access, and investment issues inside China’s industrial policies. Reade underlined that what the U.S. is attempting to achieve is the creation of a level playing field for U.S. companies.

Reade concluded her remarks by stressing the importance of a focus on liberalization. She spurred Chinese policy makers to move forward in areas that are important to U.S. stakeholders.

Daniel Bahar, Deputy Assistant U.S. Trade Representative for Investment, Office of the U.S. Trade Representative, opened his remarks by giving a very detailed ground level explanation on bilateral investment treaties. Bahar underlined that these treaties provide a significant mechanism for enforcement: investor state arbitration.  If either country believes the other country has breached the treaty, then the complainant country can seek international arbitration.

Bahar stated the goal is to create balanced, meaningful and transparent treaties. The USTR shares responsibility for the bilateral trade agreement with the State Department.  These agencies have been pursuing a bilateral treaty with China since 2008. Bahar spent the rest of his time speaking about the significant obstacles, those in the non –discrimination rules. He shared that the July meetings found the two governments agreeing to nondiscrimination that includes market access and the negative list approach. Mr. Bahar concluded his remarks by reiterating that the U.S. has made significant progress, but that the U.S. delegation is well aware that this is still a challenging negotiation.

Erin Ennis, Vice President, U.S. China Business Council, brought a business perspective to the proceedings. She gave voice to what that community is looking for in deliberations with the Chinese government on trade policy, namely economic reforms. Ennis went on to outline where those reforms ought to take place. First, she argued against investment restrictions, so that a  foreign operator can open a business as their local competitors can, even though she acknowledged that realistically this will take some time. Second, she argued for intellectual property protection. And third she argued for innovation; China wants to move up the chain to be a source of innovation in the world, which would reward companies for doing innovative things within their borders.

The final panelist, Doug Guthrie, Professor of International Business, George Washington University, framed the conversation in a historical perspective. Like the previous panelists he emphasized that China is at a critical juncture under the direction of new leadership. Professor Guthrie then focused his comments on the China of 1992 to 2002 when there was great momentum of institutional infrastructure under the leadership of Zhu Rongji, Vice-Premier and then fifth Premier of the People’s Republic of China. Guthrie described Zhu as an amazing leader and believes what happened after he left office has been terrible.

According to Guthrie, since 2003 power has shifted away from the central government and back to the provinces, which have taken back a lot of control of state owned enterprises. This lack of control at the center has created powerful provinces, some with protectionist markets, some not. Radical institutional mishmash, or too many major Chinese investors having trouble in this particular markets, has created a disconnect in understanding how the markets open up here.

Professor Guthrie also cautioned the audience not to get stuck in the characteristic mind set about state owned economies. We are locked into a simplistic understanding of a state run market. He also underlines that trade is a two way street, and that the U.S. needs to look at some of its behaviors when it comes to blocking foreign investment. Lastly, he stressed the importance of industrial policies, planning, and investment in the future.

Each speaker mentioned that China’s new leadership has led to uncertainty on reform; however the general consensus was one of cautious optimism that the country is in fact turning away from retrenchment.

A lengthy question and answer session followed the panel.

Full video of the event can be found here.

Follow these events on Twitter #gcbpptrade.



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