Negotiators Are In Beijing For Talks On Ending U.S.-China Trade War
DAVID GREENE, HOST:
So can the United States and the Chinese come to an agreement over trade? This is the big question with U.S. negotiators now in Beijing hammering away at a deal to end the ongoing trade war with China.
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STEVEN MNUCHIN: I think there is a strong desire from both sides to see if we can wrap this up or move on.
GREENE: That strong desire being expressed there by Treasury Secretary Steven Mnuchin, speaking on Fox Business recently. But how close are we to a deal with this latest round of talks? And what, if anything, has been achieved so far? We're joined in our studios in Washington, D.C., by someone who watches the smoke signals coming from the negotiating rooms. It's Erin Ennis. She's senior vice president of the U.S.-China Business Council. Her group represents some 200 of the biggest U.S. companies operating in China.
Welcome back to the program.
ERIN ENNIS: Thank you.
GREENE: So listening to the Treasury secretary there, do you think that sounds optimistic or, what do you take from that?
ENNIS: Well, I'm an eternal optimist so I think probably they are getting closer. What we are hearing from both governments, actually, is that they continue to chip away at the outstanding issues. There's a lot of rumors about what the current status is on some of the specific issues. But what we have heard consistently is that the issues continue to narrow, and that the key focus currently and that may have the most difficult issues has to do with the enforcement mechanism for whatever they come up with.
GREENE: So chipping away, narrowing - I mean, that sounds like what we've been talking about for, you know, months now. What gives you any sense that there could be some big deal coming?
ENNIS: I'm not quite sure what the deal is going to look like. What I can tell you is that we've seen over the past few months China taking some moves that are worthwhile to address some of the concerns that foreign companies have. Back in March, they passed a new foreign investment law that included changes that would seemingly improve intellectual property rights protection and prohibit technology transfer requirements. The implementation of all of those things will be key. But those are the kinds of steps that you want to see on the road to a deal, and how this all comes together in the end will depend on what these ongoing negotiations actually finalize.
GREENE: Let's just take an example of intellectual property protection. I mean, you say that enforcement is really going to be one of the sticking points I mean, can you give me a concrete example of something one of your companies needs to really feel protected when it comes to IP in China?
ENNIS: Sure. So I think probably the main thing to keep in mind at the top of this idea is that intellectual property rights protection in China has continued to improve over the years. Our polling of U.S.-China Business Council members indicates that they have increasing confidence that the market is getting better on this front. At the same time, there are areas where there are clearly holes. China doesn't do as much to protect trade secrets so those ideas about how something is made rather than the specific patent of it, there've been some holes in the patent law.
There's problems in a regulatory process. When you need to submit a new product, you have to share a lot more information than is required in other markets. That means that you've got more IP that could be stolen in that process. How those things are dealt with, those kind of nitty-gritty details, are really where the focus is right now in negotiations, rather than the broad concept of whether IP should be protected or not.
GREENE: So an example could be, OK, if a company is going to operate in China, the Chinese cannot enforce that company to tell them everything about how they came up with their products. I mean, that would be something that would make a U.S. company feel better about being there.
ENNIS: Absolutely. And that's among the things that were included in the foreign investment law changes and some of the other new regulations that we're seeing that would limit the amount of information that you have to share in those kinds of processes. That would be a positive development.
GREENE: What about on the flipside? What do you think the United States is likely to give up, you know, in terms of Chinese demands, if there's going to be a deal here?
ENNIS: Yeah. There's very little, really, that the United States is in a position to need to give up. We have a very open economy, and we treat foreign and domestic companies generally on an equal basis. What China's main requirements or requests have been over the years has been to loosen export controls - that seems unlikely - to improve the protection of their foreign companies when they're investing here in the United States. Generally, that is already done. We've seen some requests over the years by China to approve individual company license applications, those kinds of things. The bottom line is, I don't see the United States giving up a whole lot because our economy is already comparatively much more open than China's.
GREENE: Then what is China's incentive here if they're not going to get anything? Like, what would be the incentive to come up with a so-called deal?
ENNIS: Well, I think there's a couple of reasons. The first and foremost one is that I think that China's leadership does recognize that they need foreign investment in their market and that they want to promote a more stable investment environment for those foreign companies. It has not gone unnoticed in China's leadership that there are problems with how the economy has opened up to those foreign companies. I think the other thing that the Chinese are interested in these negotiations is having a stable global investment environment, as well. It's not just the United States that has raised these concerns in China. It's been our trading partners in Japan, and Europe and elsewhere.
And so by coming to an agreement with the United States, they're much more likely to then provide the exact same benefits to other foreign companies and create some better harmony across the board.
GREENE: And just in the few seconds we have left, I mean, how much is at stake here? If a deal were to blow up at the last minute, what's on the line for companies you represent?
ENNIS: Well, for American companies, that's a significant market for exports. And keep in mind that right now we've got tariffs on about $267 billion worth of Chinese imports between the IP, and the steel and aluminum tariffs. But China's got tariffs on 85 percent of U.S. exports. So coming to a resolution will mean not only a better investment environment in China for American companies, but also a better opportunity for American exporters to be able to access the market.
GREENE: Erin Ennis is senior vice president of the U.S.-China Business Council. Thanks so much for coming in.
ENNIS: Thank you.
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