U.S. Trade Representative Robert Lighthizer on Tuesday told the Senate Finance Committee he doesn’t believe any final result of U.S.-China talks would incentivize U.S. business operations to move to China.
“I think the way we’re losing jobs in America is because people are going there anyway for their own reason, and then their technology is being stolen,” Lighthizer said in response to a question by Sen. Sherrod Brown, D-Ohio. “Competitors are being created. Those competitors are then not only wiping out the U.S. industry which went there … but also then coming in and taking over the U.S. market.”
Lighthizer said one of the “clearly unforeseeable” aspects of China being granted permanent normal trade relations status at the World Trade Organization was a shift of U.S. manufacturing to China and subsequent loss of U.S. technology.
“I do think that we’ve got to be careful about providing more incentives for companies,” Brown said during the committee hearing on WTO reform.
WTO members provide concessions based on their development status, which is self-declared, as provided by WTO rules.
The U.S. in February pitched a WTO reform draft proposal calling for current and future WTO negotiations to withhold the special and differential treatment normally provided for developing countries if the World Bank classifies the countries as “high income,” if the countries are OECD members, if the countries are in the G20 and if the countries account for 0.5 percent or more of world trade, Reuters reported Feb. 15.
The OECD is a 36-country intergovernmental organization focused on promoting economic progress and world trade, among other things, and most members are high-income economies.
China, the No. 2 biggest world economy, benefits from identifying itself as a developing country at the WTO.
“The people that are taking advantage of it aren’t going to agree to it,” he said. “It’s a fundamental problem. It’s something that we’re shedding light on. I think some other countries are starting also to talk about it. There’s even been a suggestion that, ‘Well, maybe the United States ought to just self-designate itself as a developing country, and then we’re all treated the same.’”
Lighthizer continued, “If I knew the actual answer, I would give it to you. What we’re doing now is shedding light on it, telling people what a problem there is, and when we have new negotiations, making it clear that we’re not going to give people other than the truly poor nations of the world any kind of a benefit in terms of the kind of obligations that we’re undertaking.”
Sen. Rob Portman, R-Ohio, a former USTR, raised the possibility of switching the WTO from a consensus-based to a majority- or supermajority-based system.
“It’s troubling to me that other countries would use this consensus to protect, in an unfair way, their own economies,” Lighthizer said. “On the other hand, I would never recommend anyone to say let’s have two-thirds of the people in the world sit down and vote and make rules that would have a negative effect on the U.S. So to me, the consensus is a dilemma.”
As the U.S., EU and Japan work to roll out more details this spring on their joint WTO reform vision, the U.S. is trying to promote a common understanding between the three WTO members on the issues of technical transfer, intellectual property and Chinese investment in other countries, he said.
Officials from the three WTO member governments have met five times as part of their reform effort, Lighthizer said.
“I think it’s been very successful,” he said. “It has brought other people along, but the focus has really been the three of us, and we’re trying to come up with specific examples.”
The U.S. Council for International Business (USCIB) on Wednesday released an outline for WTO reform.
The New York-based trade association emphasized the importance for the WTO members to draw input from business.
“The private sector has a direct stake in the rules that will be the outcome of the government-to-government discussions and, accordingly, private sector comments and recommendations should be actively solicited and given careful consideration,” USCIB said.
“The WTO’s existing agreements, such as those on intellectual property rights, sanitary and phytosanitary measures and technical barriers to trade, provide practical commercial benefits for business because they establish global frameworks of rules designed to facilitate international trade,” said USCIB President and CEO Peter Robinson and USCIB Trade and Investment Committee Chair Charles Johnston in a letter this week to the Senate Commerce Committee.