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TUESDAY, APRIL 17, 2018
Click
here for last Friday's quote from President Xi Jinping.
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SENATOR GRASSLEY: IMPRESSIONS FROM A CHINA TRIP
"I kind of came away with the opinion that they'll do anything legal or illegal, anything moral or immoral, anything ethical or unethical to do whatever it takes to get ahead and stay ahead."
Sen. Chuck Grassley
April 11, 2018
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On April 11, the Subcommittee on International Trade, Customs and Global Competitiveness, part of the Senate Finance Committee, held a hearing on "Market Access Challenges in China." Rather than ask questions of the witnesses, when it was his turn,
Senator Grassley, an Iowa Republican and former chairman of the Finance Committee, shared his impressions from a recent trip to China. He took issue with China's insistence on being regarded as "a developing country" in the WTO, and he expressed some measure of regret for having voted in favor of China joining the WTO. "It hasn't turned out the way that I anticipated," he told the Chinese, "by you violating all of these rules and doing what you do to foreign competition." He also said, however that "I still think they [China] ought to be in the WTO because that signifies living by the trade rules that we have under our international organizations."
Transcript. Here is our very lightly edited transcript of Senator Grassley's remarks on April 11.
SENATOR GRASSLEY: I'd like to reflect on a trip I had with [Senators] Daines and Johnson and Perdue and Sasse to China a couple weeks ago. We visited five cities. We didn't visit any of the rural part of the country. And Daines, Johnson, and Perdue have been to China many times connected with businesses; so they know better than I do about China and what they do that way.
But I had various ideas about China before I went there, and all I can say is [that] they were made very real to me, some assumptions I had, like [China] wanting their status as a developing nation to still be considered. That doesn't meet the common-sense test. I think a common-sense test for me was, if they wanted ... their businesses doing business in the United States... They're the second largest economy in the world. We're the largest. If they want to do business in our country, we ought to be able to do business on the same basis in their country. That's just what common sense tells me. If China was the fiftieth largest economy in the world, that would be a whole different story. But Number 1 and Number 2 ought to be able to see things pretty much [the same way].
I kind of came away with the opinion that they'll do anything legal or illegal, anything moral or immoral, anything ethical or unethical to do whatever they want to to get ahead and to stay ahead.
And I had a chance with the political leaders in each one of these five cities-each of us had an opportunity to present our views and ask for their rebuttal. I said I'm one of the few members of the United States Senate, still in the Senate, that voted for China to be in the WTO. I thought it was a very good thing that they be in the WTO. And I suppose I still think that they ought to be in the WTO because that signifies living by the trade rules that we have under our international organizations. And I said, it hasn't turned out the way that I anticipated by you violating all these rules and doing what you do to foreign competition. And I said, you know, I kind of feel like I should be sorry for my vote. Of course, they assured me I shouldn't be sorry for my vote.
And then you keep hearing from them, we'll want to have dialogue with the United States. Well, we've been having dialogue with them for a long, long time. I told them, my view - not that they're going to listen to me but they have to hear me, what I think: You know what needs to be done; you just ought to do it. But they are, as you said, I think, Ms. Lee, very strategic and we're very short-sighted. That's our fault.
But if you want to do business in that country, do you have to give them all your trade secrets? They steal our trademarks. They make fake products. They violate ... everything. And so, I'll end with this, whoever one of you said that we need new laws, I'd like to have my colleagues look at a bill that Senator Brown and I have put in that would take a lot of what countries want to do here into consideration, particularly if they are going to buy into the United States and buy our research and development and all that sort of stuff.
Then lastly, the former governor of Iowa [Terry Branstad] is now the ambassador to China. I saw him at several of our meetings over there. I came to this conclusion from visiting with Chinese political leaders: because of his 30-year relationship with President Xi, and from American business people over there, as well as our foreign service officers, I got a feeling that he was the right choice for the President of the United States to choose to be our ambassador there. Thank you very much.
As indicated, the other senators on the trip, all Republicans, were
Sen. Steve Daines of Montana,
Sen. Ron Johnson of Wisconsin,
Sen. David Perdue of Georgia, and
Sen. Ben Sasse of Nebraska.
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For our money, the April 11 hearing on market access in China was a model of what a Congressional hearing should be. The witnesses were excellent. (We should disclose that two of them were from GBD member organizations and three of them are friends.) Our assessment, however, relates to the fact that they all knew their briefs and each contributed importantly to the conversation. As for the senators, there was no grandstanding and, as we listened, no partisanship. There was simply the reality of elected U.S. officials confronting arguably America's most important and most intractable trade issue, what to do about China.
That's not to say that the senators who spoke didn't focus on the concerns of their states. Of course, they did. That's the job. So,
Senator Casey of Pennsylvania talked about the revival of Pittsburgh. Once America's steel city, Pittsburgh has remade itself as a high-tech center, with an emphasis on healthcare. He naturally doesn't want to see Chinese industrial policy blow away the jobs of the new Pittsburgh.
Senator Roberts of Kansas, the chairman of the Senate Agriculture Committee, understandably is concerned that China's retaliation against U.S. farm exports is something that American agriculture simply cannot afford, not now with farm income at its lowest level since 2006.
Linda Dempsey set out the problem clearly and succinctly in her brief opening statement. Ms. Dempsey is the Vice President for International Economic Affairs at the National Association of Manufacturers. "On the one hand," she said,
"there are few places in the world where manufacturers export more or have increased sales more" than in China. Almost $97 billion worth in 2017. "On the other hand," she said,
"there are few places in the world where trade has proven more challenging." She then listed some of those challenges from localization policies to the kinds of intellectual property rights issues that are the subject of the current 301 case.
As we have said, we thought it was an excellent hearing and we have every intention of returning to it. But it should surprise no one that it was an event dominated more by a listing of concerns than by a breakthrough on any side of the issue. Making the U.S.-China commercial relationship work is truly a long-term project. That was one of the messages from the April 11 hearing. We took the same message from the April 4 blog post by AEI's
Derek Scissors. He wrote:
Subsidies driven industrial policy and theft of U.S. technology have been cornerstones of Chinese economic strategy since "opening up" began in 1979. Ending them completely might require a real war, not a "trade war." Just blunting them requires sustained American counter measures far stronger than what has been offered.
Finally, it is hard to read or listen to Senator Grassley's statement, the source for today's quote, without recalling that he himself is a farmer and that Iowa is a major farm producing state. One has to believe that part of his great frustration with China is his keen sense of the costs associated with trying to make any corrections in the status quo.
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When comes to movies, songs, books, poems, and poets, we don't have favorites. But Emily Dickinson is right up there. Her quiet efforts to come to grips with the human condition, with all that flesh is heir to, is often heroic. And it was her line,
"I like a look of Agony/Because I know it's true" that came to mind as we listened to Senator Grassley discuss his recent trip to China.
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SECTION 301 AND THE FUTURE OF U.S.-CHINA TRADE
This next GBD event will be on Wednesday, April 25, at the National Press Club in Washington from 8:45 a.m. to 10:30 a.m. Click the title link above for details, including the list of speakers and registration options. We look forward to seeing you on the 25th.
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At The Finance Committee is a link to the page of the Senate Committee with details of the hearing held by the Subcommittee on International Trade, Customs, and Global Competitiveness on April 11. These include statements of the witnesses and a full video recording of the event. The recording was the source for today's featured quote.
Opening Statement is a link to the oral presentation given by NAM's Linda Dempsey at the April 11 hearing on Market Access in China.
Scissors on U.S.-China Trade is a link to the blog post by AEI's Derek Scissors with the observation quoted above.
A Dickinson Poem is a link to the text of the short poem by Emily Dickinson whose first two lines are quoted above.
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©2018The Global Business Dialogue, Inc.
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Tel: (202) 559-9316
R. K. Morris, Editor
Joanne Thornton, Associate Editor
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