Our Only Option With China: Winning

Updated: Apr 15, 2019

As U.S.-China trade negotiations proceed, the single most important thing American negotiators must secure is an air-tight, enforceable stop to Chinese wholesale theft of U.S. firms’ intellectual property, including through forced joint ventures and tech transfer mandates. Anything less isn’t worth the price.

China must also accept requirements guaranteeing fair competition to American businesses and ending state subsidies for Chinese national champions.

But it’s hard to raise one’s expectations above “tepid.” China has consistently misled and misbehaved, while disrespecting IP, due process, sovereignty and the rule of law.

Systematic IP expropriation, abuse of regulatory mechanisms, forced joint ventures with Chinese “partner” (thief) firms, etc. — Chinese trade negotiators have dug in their heels against real reforms to any of these.

China is all smoke and mirrors. In current talks, it’s pitched counting foreign-made goods as U.S. exports. It’s dusted off overly general foreign-investment legislation and sewn on a meaningless trade-secrets protection measure that repeats meaningless current-law trade-secrets “protection.”

State-owned and state-subsidized national champions. Currency manipulation. Institutionalized theft of U.S. IP both in China and in the United States. Twisting laws and official functions for predetermined, pro-Chinese outcomes. All de rigueur.

The U.S. semiconductor industry wisely questions China’s offer to buy $30 billion in American chips, suspecting a scheme that would end up costing the sector its future.

A cautionary tale comes from China’s decades-long record of subverting and ignoring rules-based frameworks. China’s accession to the WTO illustrates the sobering truth.

China’s nonchalance about property rights and the rule of law have had serious consequences. U.S. Business & Industry Council President Kevin Kearns points out that “China’s leaders have continually flouted [the World Trade Organization’s] rules-based system to amass great wealth illegally while becoming increasingly repressive at home.”

The lesson: No more empty Chinese promises. The American team absolutely must insist on nothing short of clear, strong language with sharp teeth for holding both Chinese bad actors and the Chinese government accountable for cheating.

I hope U.S. Trade Rep. Robert Lighthizer comes from Missouri, the “Show Me State.” We have to know up front that the deal’s air-tight, that it ensures swift accountability and consequences, and that whatever we give up is worth the price.

If U.S. negotiators can’t achieve a real win against China’s command-and-control economy, then better to forego a mediocre or bad deal than to sell America’s private property-based innovation birthright for a bowl of porridge.

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