Interview

by Malcolm Riddell

The Phase One Trade Deal

CHINADebate

Malcolm Riddell
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Founder of CHINADebate

&
May 6, 2020
The Phase One Trade Deal
The Phase One Trade Deal
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Craig Allen

President, U.S.-China Business Council

1. Why Members Are Happy with the Phase One Deal

2. The Phase One Trade Deal

3. Should the Tariffs on China be Lifted During the Pandemic?

1. Why Members Are Happy with the Phase One Deal

‘The good news is that 80% of our members said they thought the Phase One agreement was a good thing.' 'But only 19% said it was worth it.' 'What the 80% said they are happy about was that there no more new tariffs were coming immediately.’

U.S.-China Business Council. 'The US-China Business Council (USCBC) is a private, nonpartisan, nonprofit organization of approximately 200 American companies that do business with China.'

  • 'Founded in 1973, USCBC has provided unmatched information, advisory, advocacy, and program services to its members for over four decades.'

Craig Allen. ‘Prior to joining USCBC as president in 2018, Craig Allen had a long, distinguished career in US public service.’

  • ‘Craig began his government career in 1985 at the Department of Commerce’s International Trade Administration (ITA).’  
  • ‘In 2002, he was promoted to the Minister Counselor rank of the Senior Foreign Service.’
  • ‘He later served as Deputy Assistant Secretary for Asia at the US Department of Commerce’s International Trade Administration, then Deputy Assistant Secretary for China.’  ·
  • 'Craig became the United States ambassador to Brunei Darussalam on December 19, 2014.’

2. The Phase One Trade Deal

Malcolm Riddell: ‘What did we accomplish in the Phase One trade deal?’

Craig Allen: ‘Well, not a lot yet. But the Phase One deal, I think, is good.’

  • ‘It’s delivering, particularly for farmers, intellectual property rights holders, and financial services firms.’

‘Let's hope the purchase targets the Chinese and the American sides have agreed to will actually work.’

  • ‘But we need to be realistic about that.’

Malcolm Riddell:  ‘The trade war caused a lot of dislocation and disruption. I just don't think that was worth some extra purchases.’

Craig Allen: ‘Well, we did an interesting survey of our members about that.’

  • ‘The good news is that 80% of our members said they thought the Phase One agreement was a good thing - it was positive.’
  • ‘But only 19% said it was worth it.’
  • ‘And what the 80% said they are happy about was that there no more new tariffs were coming immediately.’

‘We have to remember, the United States maintains, by our rough calculation, 89% of the tariffs that were already in place.’

‘Thus, we have 25% tariffs on $370 billion worth of Chinese imports.’

  • ‘And one has to wonder if they're there in perpetuity or not.’

‘The 20% who are not happy are mostly manufacturers.’

  • ‘American manufacturing has really been impacted by the U.S tariffs and then by the counter- tariffs from China as well.’
  • ‘Especially many small – and medium-size American manufacturers that bought so many industrial, intermediates - be it paint or buttons or zipper or machinery or whatever from China.’

3. Should the Tariffs on China be Lifted During the Pandemic?

‘But the Trump administration seems to want to keep the tariffs on China.’

Malcolm Riddell: ‘Has the U.S.-China Business Council called for the tariffs on China to be lifted?’

Craig Allen: ‘We’ve been advocating that tariffs be lifted for the duration of this epidemiological and economic crisis.’

‘But the Trump administration seems to want to keep the tariffs on China.’

  • ‘Within the USTR the thinking is that this would reduce their leverage in negotiations on Phase Two.’
  • ‘In the White House there is the belief that the President has articulated many times that the Chinese are paying the tariff, not the Americans. Therefore it would not do the Americans any good to get rid of the tariffs.’

‘I think that's just factually wrong.'

  • ‘But it's, as the French say, an "idée fixe" - a fixed idea among some people, and they're just not going to change.’
  • ‘Have no doubt though: It's American families, American small- and medium-size enterprises, and American farmers that are paying the tariffs.’

‘Because of our position on trade and tariffs and because we counter the president’s narrative by asserting that the Chinese are not paying the tariffs, President Trump has said somebody should look into the U.S.-China Business Council to see who's funding them.’

  • ‘We contradict this. Our funding is 100% from American companies - not one penny from any Chinese entity.’
  • ‘Our positions are those that we believe benefit U.S. companies and the U.S. economy. Period.’

‘Although it's difficult to draw a one-to-one correspondence between a decline in exports and, jobs, it is a factor.’

  • ‘It’s fair to say that we've lost about $20 billion annually in exports.’
  • ‘That’s about a 100,000 or more U.S. jobs – and that’s only on the export side.’
  • ‘When you add services and you add the dislocations from imports, it would be significantly more than that.’  

‘A hundred thousand U.S. manufacturing jobs lost out of a labor pool of 160 million or so – not a huge percentage.’

  • ‘But consider: In 2018 and 2019, those people who lost their jobs were able to find new jobs - that's no longer true in 2020.’
  • ‘Therefore just revoking the tariffs would have a significant impact on employment, particularly in the agricultural States, in the manufacturing states of the Midwest.’
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