U.S., China Agree To Cut Tariffs On High-Tech Products
RENEE MONTAGNE, HOST:
A trade agreement between the U.S. and China represents a leap of faith. It's faith in free trade.
STEVE INSKEEP, HOST:
President Obama was able to announce the deal with Chinese leaders while visiting Beijing. It cuts tariffs, import taxes, on a wide range of high-tech products.
MONTAGNE: It's a huge opportunity for U.S. firms to sell in China. And it opens U.S. markets more widely to Chinese firms. NPR's Aarti Shahani reports on what it means for Silicon Valley.
AARTI SHAHANI, BYLINE: If the deal goes through, Intel is a clear winner. The Silicon Valley-based company has been doing business in China for nearly 30 years.
GREG SLATER: We are interdependent. There is no doubt about that.
SHAHANI: Greg Slater is Intel's general counsel to China.
SLATER: To the extent we can strengthen our economic ties, that is always good for both countries and for the global economy.
SHAHANI: This deal would cut tariffs by up to 25 percent on a range of products - medical devices, game consoles, computer chips. Intel is America's largest chip-maker and Slater says, this deal is a great development that helps Intel sell more hardware and also sell more cloud services to all the new companies that need to store and process data online.
SLATER: We may not even be the biggest winner. The - calculating the benefits is difficult.
SHAHANI: The agreement comes at a time when customers around the world are eager to buy smart devices connected to the Internet. But it's still too soon to tell if more U.S. exports will flood China or the other way around. What is clear is that China has shifted its stance. For years, the U.S.-based Semiconductor Industry Association tried to get China to cut tariffs on the most advanced computer chips. And according to Vice President David Isaacs, China refused, perhaps to protect its own semi-conductor industry.
DAVID ISAACS: They are pretty behind the curve compared to leading-edge U.S. companies. And so they are in fact dependent on U.S. and other companies for these products. They're trying to catch up but that will take some time.
SHAHANI: Isaacs says China may be repositioning to help other parts of its technology sector grow more quickly. Manufacturers there need chips to build Internet routers, smartphones, cars.
ISAACS: You name it - it's in so many things.
SHAHANI: It's not a done deal just yet. Other countries have to approve the agreement at next month's World Trade Organization meeting in Geneva. It's been nearly two decades since the WTO passed a major deal on tariffs. And even if it passes, economist Nariman Behravesh, with the global research firm IHS, would not overstate its importance in the bigger picture.
NARIMAN BEHRAVESH: I don't think this solves any of the fundamental disagreements that have existed between China and the U.S. whether it's on intellectual property or on strategic issues.
SHAHANI: The White House estimates the deal would eliminate tariffs on roughly $1 trillion in annual sales of high-tech products, more than a $100 billion of which comes from the U.S. Aarti Shahani, NPR News, San Francisco.
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