China may agree to buy more U.S. agriculture commodities and lift onerous trade barriers in the ongoing talks, but unless negotiators can agree on an effective way to make sure the Chinese live up to their promises, any final deal would be worthless.
The U.S. has been stung too many times by China and other countries not living up to promises, Trump administration officials and U.S. lawmakers say.
“I think that whatever we agree to as a matter of substance, enforcement is very important because we have been snookered by the Chinese in past agreements that they don’t really live up to,” Senate Finance Committee Chairman Chuck Grassley said Tuesday. “In final negotiations, enforcement is the last big thing for our government to work out, and our negotiators are on top of it.”
Both countries have suggested a final deal to presumably end the trade war could be ready by the end of March, but negotiators say they still have major hurdles ahead of them as they try to bridge their positions on a wide array of policy issues dealing with everything from forced technology transfer to biotechnology approval systems.
U.S. Trade Representative Robert Lighthizer gave lawmakers and the public the first outline of what the enforcement mechanism would look like, describing a layered system of checks and balances that would rely heavily on U.S. businesses and exporters reporting problems.
U.S. Trade Representative Robert Lighthizer
The bottom layer would be made up of lower-level U.S. and Chinese officials that will meet monthly to discuss reports of abuses. Above that will be the “vice-ministerial” level, made up of officials who will meet quarterly, and at the top will be Lighthizer and Chinese Vice Premier Liu He, who will meet twice a year.
The way in which future problems will be discovered are two-fold, Lighthizer said at a House Ways and Means Committee hearing. The first, he explained, is when “individual companies will come to us with complaints about practices and we’ll be able to work those through the process.” The second, he said, “will be systemic problems where we will see patterns developing and a series of things we will disagree with and we will bring these through the process.”
He did not explain what that “process” would be or go into any detail about penalties for breaking new rules of an agreement, but stressed that when rule-breaking occurs, the U.S. would “act proportionately and unilaterally to insist on enforcement.”
American Farm Bureau Federation Senior Director David Salmonsen said the plan is the administration’s way of saying it will not take their eyes off China after a deal is reached.
“This is a way of saying they’re going to keep China … living up to its agreements by watching them all the time,” he told Agri-Pulse.
American Enterprise Institute resident scholar Derek Scissors described Lighthizer’s enforcement plan as an inadequate failure.
“It goes without saying that any US-China deal is only worthwhile with strong enforcement, but it’s even more true for President Trump,” Scissors noted in an analysis for AEI. “He has tagged (China) as the greatest thieves in history, blamed past presidents for not stopping them, and advertised a trade deal that will change everything. It all shouts for much better, more extensive, and if necessary harsher enforcement.”
But the U.S. ag sector, which has borne the brunt of Chinese retaliatory tariffs, continues to hope a sturdy deal with the Chinese can be reached.
China sank rapidly last year from being the largest foreign market for U.S. farm commodities, worth roughly $26 billion in annual sales, to fifth place at about $12 billion behind Canada, Mexico, the EU and Japan, according to USDA data.
The Trump administration is promising that a “magnificent” deal as early as this month could rapidly reverse the situation, pushing U.S. ag exports to China to record heights, but nothing has been set in stone yet, negotiators say.
“We’re trying to do as much as we can,” one U.S. government source said. “Not all of its done, that’s for sure.”
But a lot has been set in motion, including what U.S. negotiators say is a set table for the Chinese to agree to lifting non-tariff barriers like the country’s ban on hormone-treated beef and pork from swine treated with ractopamine.
“We’ve teed up a bunch of stuff on the ag side, so hopefully we’ll bring China across on all of them,” the government source said.
One of the ag policy issues U.S. negotiators have been pushing especially hard on is China’s opaque and lengthy biotech trait approval system. Lighthizer said last week he has made it a priority of his to get reform, but signs from inside China show that the country is going in the opposite direction.
The Chinese Ministry of Agriculture and Rural Affairs has recently revised rules to "impose additional in-country trials and studies on new biotech events as part of the dossier submission process,” according to a new analysis by USDA’s Foreign Agricultural Service.
Above all, nothing is certain when it comes to a deal with China, U.S. government and industry sources say. President Donald Trump walked away from a summit in Vietnam with North Korea’s Kim Jong Un after failing to reach a disarmament agreement that seemed to be almost assured after a signing ceremony had been scheduled and arranged. The same could happen at a meeting between Trump and Chinese President Xi Jinping, U.S. officials say.
Secretary of State Mike Pompeo, in a Tuesday interview with the Sinclair Broadcast Group, said he’s optimistic about a deal but stressed that Trump would walk away if he’s not satisfied.
“You saw us this past weekend in Hanoi,” Pompeo said. “The President’s determined to make sure that he protects his first client, his first obligation to the American people — in this case, the American farmer. This has to work for America. If it doesn’t work, we’ll keep banging away at it. We’re going to get to the right outcome.”
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