Kirk on China: A Diplomat Rather Than A Fire Brand Ideologist

US Trade Representative (USTR) Ron Kirk said Tuesday that the Obama administration hopes to ease trade disagreements with China by using "trade diplomacy." He was the key note speaker at a Washington meeting of the US-China Business Council (USCBC), considered by many as the leading organization of 220 US companies operating within the United States and throughout Asia which are engaged in business with the People’s Republic of China.

 
He felt that stronger trade with China would increase U.S. employment by prioritize market opening in China for the export of American goods, services and investments. He portrayed himself as a diplomat rather than a fire brand ideologist.
 
"Ambassador Kirk’s comments are not surprising. He carefully avoided mentioning the astronomical increase in imports from China which dwarfs our exports. He follows the hear-no-evil, see-no-evil USTR whose focus is exclusively on our exports while paying no heed to the increase in our imports from China," said Jim Schollaert of Made in USA Strategies, which is not a member of USCBC and does not support its objectives.
 
Supporting the USTR, US China Business Council President John Frisbie said "Ambassador Kirk rightly wants to continue this record of growth [the fastest growing market for U.S. exports] by ensuring American companies have access to China’s rapidly development market for goods and services. Our most important economic relationship in the years and decades ahead will be with China."
 
The USCBC’s recent white paper of recommendations to the Obama administration includes the following strategic plan for dealing with Beijing: (1) Build on the Strategic and Economic Dialogue with regular, high-level forward-looking meetings; (2) press for a rules-based trading relationship: (3) Open the Chinese economy for more U.S. exports; (4) Increase China’s participation in global economic issues.
 
This white paper answers critics by arguing that US imports from China are a result of "shifts in export manufacturing from other Asian economies to China. Think of it this way: ten years ago when you bought a Sony TV, the label probably read "Made in Japan" and the TV was an import. Today, the TV is "Made in China"-and is still an import." The white paper says US exports to China are up more than 300% since 2000.
 
The iPod is assembled in China, "but assembly accounts only for a fraction of the product’s value. Much of iPod’s value is made up of components made in the United and other Asian locations and shipped to China," says USCBC.
 
Showing its strong support of free trade, the USCBC’s white paper refutes the argument that the  loss of 2 million jobs since 2001 is due to Chinese imports. This "job loss calculations assumes that every product imported from China would have otherwise been made in the United States, which is clearly wrong."
 
But voices sound louder complaining the slow growth of US export to China. The being-the-scenes Congressional Research Service (CRS) says US exports to China were only $71.5 billion in 2008. CRS is the public policy research arm of the US Congress and works exclusively for Members of Congress and the staff in confidential memoranda. Exports to China rose 9% in 2008, down from an 18.1% increase in 2007. China has now overtaken Japan as the third largest US export market, but only accounted for 5.5% of total US exports.
 
The number one sector of US exports to China in 2008 was waste and scrap. It amounted to $7.6 billion. This sector includes junk car bodies and paper waste from newspapers and journals. Daniel Gross, a columnist for Slate, has shown the irony of the US sending real junk to China at a time when there are complaints of poor-quality products received from China, called sarcastically "junk."
 
While US exports to China are dwarfed by imports to China, a number of US companies see more opportunities. Boeing Corporation forecasts China as the largest market for commercial air travel outside the US for the next 20 years. China is expected to buy 3,710 aircraft valued at $390 billion. China is believed to be the largest internet user with online advertising growing rapidly and could be a multi-billion dollar market soon, offering internet equipment manufacturers a slice of this pie. Cisco believes that the Chinese government emphasis on building up the rural areas will bring good business to internet equipment.
 
In addition to the large US trade deficit with China, other major US-China trade issues are unsafe Chinese food and consumer products, loss of US manufacturing jobs, China’s obligations to the World Trade Organization and a long list of intellectual property rights.
 
While not a firebrand ideologue, Ambassador Kirk did affirm in his keynote speech: "When negotiation offers the fastest, best, and surest way to achieve our goals with China, the United States will take that road. But when our preferred course doesn’t work, we will not hesitate to use other tools, such as dispute settlement, to enforce the rules as written."
 
One person who spoke to ChinaStakes anonymously said "Kirk is not as smart and feisty as former US Trade Representative Robert Zoellick, and therefore less dangerous."
 

 

Tags: USTR   China-US   Ron Kirk