Capitol Hill to China’s Liu: Lower trade barriers, respect U.S. IP

May 16, 2018 Issues: Trade

Members of both congressional trade committees on Wednesday met with a Chinese trade delegation led by Vice Premier Liu He and pushed for stronger protections for U.S. intellectual property and lower trade barriers for U.S. companies, but lawmakers said the general discussion did not include commitments from the Chinese side.

Liu, Chinese President Xi Jinping’s top economic advisor, met Wednesday with House Ways & Means Chairman Kevin Brady (R-TX), trade subcommittee chairman Dave Reichert (R-WA), committee ranking member Richard Neal (D-MA), trade subcommittee ranking member Bill Pascrell (D-NJ) and Reps. Devin Nunes (R-CA), Erik Paulsen (R-MN), Tom Reed (R-NY), Sander Levin (D-MI) and Brian Higgins (D-NY). He met separately with Senate Finance Committee Chairman Orrin Hatch (R-UT).

Liu will hold talks with Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer this week in a bid to head off trade penalties stemming from the Trump administration’s Section 301 investigation into China’s intellectual property and technology transfer policies. The discussions are a continuation of talks between the two teams that began roughly two weeks ago in Beijing, a summit that ended without a substantive outcome. Both sides at those talks introduced far-reaching demands. Ross last Thursday said the U.S. and China remained “far apart” on trade talks.

Reichert told Inside U.S. Trade that Liu and his delegation “came as listeners.”

“The vice premier’s opening comment was that ‘we want to work with you and we’re here to listen,’ and we shared very openly and honestly what our concerns were, and so I think that, you know, [it was] just a good dialogue. A lot of the conversation was around intellectual property rights, obviously, [and] dumping issues,” he said.

When asked if the Chinese side had agreed to resolve issues members raised at the meeting, Reichert said “specifics weren’t really the issue of the day for the meeting,” but added that the Chinese were keen to cooperate on controlling the flow of fentanyl and opioids from China into the U.S. Liu also pointed out that China had cut steel production but said that additional reductions would result in job losses, Reichert said.

Asked if the discussions could lead the White House to walk back threats to impose tariffs on $50 billion worth of Chinese goods as a result of the Section 301 investigation, Reichert said “it’s hard for me really to know what the strategy of the White House is.”

“But I would say that for the White House it should, I think, send some of the same signals that you and I have just discussed; that they’re here, they want to work with us, they’ve said that over and over. I think one of the things that was mentioned by at least two or three of the speakers from China was that none of them wanted a trade war; they felt that the best interest of the world would benefit from the friendship and the relationship between China and the U.S., so they were real interested in creating a sort of partnership once again,” he added.

Neal stopped short of saying Liu and his team made concrete commitments.

“I think they acknowledged some of the deficiencies that we've been pointing out,” he said. “I raised the issues of forced partnerships and controlling interest, intellectual property, and the idea that there were many companies in America that wanted partners in China and they found out they could never be more than a minority shareholder.”

Asked if Liu had made clear commitments to address those issues, though, Neal said “tentatively,” and that the U.S. would have to “wait and see.”

Levin told Inside U.S. Trade he honed in on steel issues during the meeting, telling the Chinese “there needed to be a global solution but that hadn’t worked and something had to be done.” A member of the Chinese delegation responded by claiming that just 2 percent of total U.S. imports are steel, “so this isn’t a major problem,” Levin said. “I said ‘it’s a major problem.’”

The two sides also discussed intellectual property and restrictions on foreign ownership of companies in China, Levin said. “I think there was expression of interest but nothing specific,” he said.

Higgins said the roughly 50-minute-long meeting was “uneventful -- an exchange of pleasantries, very generic.”

He added that the Chinese side made no concrete commitments and said he “didn’t get the sense that it was really a working meeting but that it was more of an introductory exchange of pleasantries and mutual respect.”

“There wasn’t a lot of room there, there wasn’t a lot of space for serious discussion,” Higgins told Inside U.S. Trade. “I think they know what our issues are and I think we know what their issues are. So it was as good as an introductory meeting goes.”

He stressed that the U.S. should be doing more outside of the realm of trade policy to compete with China, listing investments in infrastructure and research and development as two areas in which the United States was losing step with Beijing. Lawmakers, he said, should “stop whining about China and stand up and compete with them.”

In a statement, Hatch said he and Liu “had a constructive conversation about how we can work toward strengthening the trade relationship between the United States and China.”

“During our meeting, I emphasized the importance of respecting intellectual property rights and the ability of American businesses to export and do business in China without being forced to transfer technology to Chinese companies – goals I share with the Trump administration,” Hatch added.

“While imposing tariffs would harm both countries, the theft of American intellectual property in China is a persistent and serious problem that must stop,” he continued. “It’s China’s responsibility to change its policies that are harming American businesses and workers and I am committed to continuing to work with them and the administration to help improve the U.S.-China bilateral trade relationship.”

Brady described a “productive meeting in which our members urged Vice Premier Liu and his delegation to work with the Administration and Congress to reduce trade barriers, increase intellectual property rights protection, and create a level playing field for American companies and workers.”

“It’s absolutely vital that we get our trading practices with China right -- and that starts with China reversing its unfair trading practices,” Brady said in a statement.

Pascrell (D-NJ) said in his own statement that “while I may not always support this Administration’s tactics or rhetoric, I fully agree that China’s overcapacity in steel and aluminum and mistreatment of U.S. technology and IP have created a crisis.”

“Their cheating has hurt U.S. businesses and workers,” Pascrell continued. “We need real change, not just ‘happy talk,’ from China. The Vice Premier heard our concerns and seemed open to working toward a solution. I plan to hold them to it.”

Pascrell told Inside U.S. Trade that “I took it right to them about the tariffs on the steel and aluminum; they went right at it too. They didn’t mind me bringing it up -- it’s a big deal to them. They must have had at least 10 high-ranking officials, which means it’s a pretty big deal to them.”

Liu’s team “seemed anxious to talk,” Pascrell continued. “And I think if this was President Trump’s objective -- to get people to talk about it – they want to talk, there’s no two ways about it.”

President Trump sparked concern among lawmakers earlier this week by suggesting that penalties placed on Chinese telecom giant ZTE for skirting U.S. sanctions on Iran and North Korea had become part of the trade dialogue. But in a series of tweets Wednesday morning, Trump blasted what he called “false stories” on the trade talks.

“Nothing has happened with ZTE except as it pertains to the larger trade deal,” Trump tweeted, adding that the U.S. had been “losing hundreds of billions of dollars a year with China.”

“We have not seen China’s demands yet, which should be few in that previous U.S. Administrations have done so poorly in negotiating. China has seen our demands. There has been no folding as the media would love people to believe,” Trump said in subsequent tweets. “The U.S. has very little to give, because it has given so much over the years. China has much to give!”

Commerce Secretary Wilbur Ross, however, on Monday said the U.S. had received Beijing’s demands at the summit in China earlier this month. “Before landing in China, we sent them an extremely detailed list of our needs, and they responded with a similarly detailed, but quite different list of proposals,” Ross said during a speech on Monday at the National Press Club.

---

INSIDE TRADE: Capitol Hill to China’s Liu: Lower trade barriers, respect U.S. IP