China and US will benefit by putting trade ties on the right track
Before the US delegation led by Treasury Secretary Steven Mnuchin arrived in Beijing to discuss a host of trade and investment issues on Thursday and Friday, the right atmosphere should have been created to make the talks productive.
But that atmosphere was poisoned after the United States unleashed a series of protectionist measures, including tariffs on solar cells and modules as well as washing machines announced in January, steel and aluminum tariffs imposed in the name of national security in March, and the proposals to slap tariffs on $150 billion of Chinese imports under Section 301 of the Trade Act of 1974.
The unilateral US actions are widely seen as a violation of the rules of the World Trade Organization, and these first shots fired by the US have triggered grave concern about the future of the multilateral global trading system.
The list of trade and investment issues between the two largest economies could be very long, but the correct approach is to address them through talks and negotiations and the existing multilateral system.
The opposition to US tariffs and other protectionist measures has been voiced not just by US trade partners, including French President Emmanuel Macron and German Chancellor Angela Merkel during their recent visits to Washington, but by many in the US as well.
The US-China Business Council, which represents 200 US companies doing business in China, released a report on Monday emphasizing the great benefits the US gains from its trade with China. Exports of US goods to China hit a record $128 billion and grew much faster than US exports to the rest of the world. US exports to China also support 1 million US jobs.
On Tuesday, the US National Retail Federation and Consumer Technology Association released a study showing the proposed US tariffs on imports from China and the retaliation promised by China would cost hundreds of thousands of US jobs and greatly harm the US economy.
Specifically, the report said the tariffs on $150 billion of Chinese imports, along with the Chinese retaliation, would decimate 455,000 US jobs and shrink US GDP by $49 billion if implemented, with US farmers bearing the brunt of the trade actions. According to the report, the net income of US farmers would decrease by 6.7 percent and 67,000 agriculture jobs would be lost.
The Brookings Institution also released its Export Monitor 2018 report on Monday, concluding that US communities that voted for President Donald Trump in 2016 are more exposed to the Chinese tariffs, as measured by the share of exports in tariff-affected industries and the direct and indirect jobs those exports support.
It is true that the tariff measures, coupled with the growing US restrictions on Chinese foreign direct investment in the US, will hurt China and many other countries that are part of the global supply chains, but the US will not emerge a winner as several US reports this week have shown.
Imposing punitive tariffs on Chinese imports and stringent restrictions on Chinese foreign direct investment will only increase the costs for US consumers and deny US companies opportunities in the vast Chinese market.
The best way forward is for the two sides to sit down and address each other's concerns in an equal and mutually respectful way. Although it is unrealistic to expect many thorny issues to be solved overnight, talks, rather than unilateral actions, are the only right option.
The two countries should resume talks on the Bilateral Investment Treaty, or even start discussing the possibility of a free trade agreement to pave the way for a lasting and healthy trade and investment relationship.
The author is deputy editor of China Daily USA.