Sputnik has discussed this with Joel Trachtman, a professor of international law at the Fletcher School of Law and Diplomacy at Tufts University.
Sputnik: In your view how likely are the US and China to reach some sort of consensus in the upcoming trade talks?
First of all, on the US side but also on the Chinese side. On the US side, we've got a Treasury Under Secretary for International Affairs, David Malpass. One problem is that the Treasury is not the responsible agency for these tariffs. It's the United States trade representative or trade ministry that's responsible, but Malpass works for Steven Mnuchin who is the trade dove in the Trump administration. So, perhaps that's the reason that this is being done through the Treasury Department.
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And on the Chinese side, they're sending also a lower level, Vice Minister of Commerce Wang Shouwen and so it's unlikely that too much will happen. I think that the Chinese are sending a lower level person because last May, when they negotiated at a higher level with Steven Mnuchin there was a deal that was reached, at least tentatively, and then President Trump decided that he did not want to accept that deal and dropped that in May.
So the Chinese have been frustrated by the United States; and remember that these tariffs, most of the tariffs that we're speaking of were imposed in response to Chinese intellectual property practices, largely where China had set the transfer of technology as a condition for foreign direct investment from countries like the United States. And the United States hasn't exactly said what kinds of changes it expects from China, nor has China made any proposal along these lines. One other thing I might say is that Larry Kudlow the director of President Trump's National Economic Council has said that the United States has no intention of backing down on these tariffs. It's hard to imagine what these lower-level officials can do later this month.
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Sputnik: Do you find this surprising?
Joel Trachtman: President Trump has said in a number of tweets and on other occasions that the purpose of these punitive tariffs is to bring the other party to the negotiating table. However, as I said, the Trump administration hasn't really said what it wants. One of the things that it wants is a reduction in the trade surplus that China currently is experiencing vis-a-vis the United States. There is really no proposal as to exactly how that could occur. So it does seem inconsistent with Trump's statements that this is to promote negotiations when the United States doesn't really seem prepared to negotiate at this moment.
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Sputnik: Why do you think that they haven't stated what it is exactly what they want? Do they, perhaps, not know themselves or is there some discussion being held right now as to what really needs to be done?
Joel Trachtman: I think that President Trump himself and in some ways the rest of his administration has a rather simplistic view of trade policy. Their focus is on trade deficits and it is very difficult to use tariffs and trade policy to reduce deficits. The deficit is largely a result of the difference between domestic savings and domestic investment and many of the policies that President Trump has instituted, including a tax cut at the beginning of this year, have had the result of actually increasing the overall deficit.
So I think that we have a situation in which the president is taking actions without really understanding that those actions are not related well to the policy goals that he's seeking to achieve. There certainly is an issue with intellectual property rights, but that issue is not well addressed by these tariffs themselves.
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And the United States hasn't made a proposal, nor has China made a proposal, with respect to changes in China's intellectual property rights practices. And so it's frustrating for the Chinese side when they don't know what they could do to relieve the pressure of these punitive tariffs.
These tariffs are going to be very damaging to China and I think the Chinese are worried about the level of the United States' tariffs, but they're also very damaging to the United States. There's kind of a double whammy for the United States. When the United States blocks imports of intermediate products and capital goods from China it hurts the United States' manufacturing. So our policy hurts the United States manufacturing and then when China retaliates, so far largely on United States' agricultural goods, it hurts the United States' agriculture.
The views and opinions expressed by Joel Trachtman are those of the speaker and do not necessarily reflect those of Sputnik.
