As we mentioned in Tuesday's entry,
Linda Dempsey is the Vice President for International Economic Affairs at the National Association of Manufacturers, and on April 11, she was one of four witnesses at a Senate Finance Committee hearing on market access issues in China. The hearing was convened by the Subcommittee on International Trade, Customs, and Global Competitiveness, which is chaired by Texas Republican, Senator
John Cornyn.
As we noted on Tuesday, Ms. Dempsey highlighted both the importance of the Chinese market for American manufacturers - with exports to China of nearly $96 billion in 2017 - and she also went through the long list of challenges China poses to U.S. firms, from investment caps to intellectual property theft.
Our focus today is on Ms. Dempsey's suggestion that America should now seek a bilateral trade agreement with China. Today's featured quote captures that suggestion. It is taken from the written testimony Ms. Dempsey submitted for the record. Here is a bit more of that portion of her testimony.
LINDA DEMPSEY: There is no doubt that we need to address these challenges. China simply must follow the same rules as everyone else. It simply must be held accountable when it cheats. On this nearly all parties agree. The question is how to go about doing so.
There has been a lot of debate about this for a long time. We at the NAM believe it's time to finally change the contours of that debate. We think a comprehensive strategy will be needed if our country is to truly achieve the best outcomes for American workers and American enterprise. In our view, that means pursuing a modern, innovative, and comprehensive bilateral trade agreement that wholly restructures our economic relationship with China. This is at once a radical idea and, in our view, the most pragmatic and effective way forward.
Ms. Dempsey expanded on these thoughts during the Q&A portion of the hearing. One exchange in particular caught our attention. Senator Cornyn, picking up on references to China "playing the long game," expressed concern that, if the U.S. does not act fairly quickly, it may find itself the loser in competition with China long before the long game even gets started. Ms. Dempsey responded:
You know I think one of the issues that this Administration, this President, has brought to the table is the urgency of the situation. And my remarks on
a bilateral trade agreement with China, that's not a long game. That's something we should be engaged in right now with real timetables to move this forward, because we've got to solve these issues now rather than later. The Chinese market - Mr. Garfield talked about the ICT sector. Think about autos that the Senator from South Carolina, Senator Scott, was talking about. Last year in China, there were nearly 30 million vehicle sales. Contrast that to the United States market, about 17 and a half million vehicle sales. We've got be part of that market. We've got to find a way to grow in the market.
And right now the rules are stacked against us. We have old rules. We can bring them to comply with the WTO rules that are clear-cut. There have been many cases that the U.S. Government has brought: rare earths, raw materials, auto parts, some others. Where the rules were absolutely clear, China actually complied. But we don't have clear enough rules on a lot of these issues right now. We've got unfair trade practices that both Ms. Lee and I talked about. We need to make sure that our own rules there are enforced as well, but we've got to act now.
There was no real, substantive discussion of the merits of NAM's proposal for a bilateral trade deal with China, though the Chairman did express some misgivings about the sheer magnitude of such an undertaking.
Senator Cornyn said:
Ms Dempsey, you said we need to get a bilateral agreement with China. Most of us are concerned with the more immediate concerns about Section 232, Section 301, and NAFTA renegotiations. It's almost like our plate is overflowing, and the idea of undertaking something of that magnitude is daunting.
Senator Cornyn then went on to ask about TPP, but we'll leave that discussion for a later entry.
