Trump Tariffs, a Means to Enforce the Law

President Donald J. Trump and President Xi Jinping | July 8, 2017 (Official White House Photo by Shealah Craighead)

At The National Interest, Salvatore Babones reminds readers that China has made commitments to free trade in the past, and has not lived up to those commitments. The President’s tariffs are one of the few non-military tools the United States has at its disposal to compel the communist government of China to fulfill its promises. Babones notes that “The current U.S.-China negotiations are all about market access, and Trump’s tariffs are focused on opening markets, not closing them.” Babones explains that America can afford to fight this trade war, but China cannot. He writes (abridged):

On November 10, 2001, after fifteen years of tortuous negotiations, China joined the World Trade Organization. The WTO describes itself as a rules-based club whose “overriding purpose is to help trade flow as freely as possible.” If only that were true when it comes to China, then the Trump administration’s so-called “trade war” would have been over before it started.

China was only allowed to join the WTO after making several commitments to free trade, the most important of which was to “provide non-discriminatory treatment to all WTO Members.” Specifically, China promised that foreign companies would “be accorded treatment no less favorable than that accorded to enterprises in China” when doing business in the country.

Tell that to Google, Facebook, Uber, and all the other American companies that have been forced out of the Chinese market.

Now is the time to set things right. It may be the only time. China’s economy is slowing and its leaders are worried. After forty years of growth, the party is over. A country only makes the transition from quick catch-up to mature growth once in its economic development trajectory. China’s transition is now. It’s not going to come around again.

Right now, China’s population is restive, and its leaders are scared. There’s blood in the water. Now is the time to strike on trade with China. If China isn’t persuaded to meet its 2001 WTO commitments now, then it never will be.

There is no such thing as a U.S.-China “trade war.” A trade war happens when two countries compete to secure advantages for their own exports over those of another country. But US and Chinese exporters rarely compete head-to-head in the same sector. Trump is not seeking advantages for American cars or refrigerators over Chinese ones.

The current U.S.-China negotiations are all about market access, and Trump’s tariffs are focused on opening markets, not closing them. Open markets have been at the heart of America’s Asia policy since before the Civil War. In 1899, Secretary of State John Hay gave the policy a name: the open door policy. But the United States has been pushing for a free and equal Pacific trading regime ever since it signed its first “most favored nation” agreement with China in 1844.

China’s doors closed when the Communist Party took power in 1949, and these days they only open for companies that China thinks it can turn to its own advantage. That is nothing like the situation in the United States, and nothing like it should be under WTO rules.

Subject to genuine national-security considerations, any Chinese company can come to the United States, set up shop, and take its chances in the U.S. market. It can freely repatriate any profits back to China. And if it feels aggrieved by anyone or anything, then it can pursue its case in U.S. courts without prejudice.

None of that is true for U.S. companies in China, but it should be.

China has outright refused to live up to its 2001 WTO commitments, but the full picture is much worse than that. Over the last two decades, China has initiated a large-scale campaign of government-sponsored industrial espionage. It forces foreign companies to transfer mission-critical technologies to local partners as the price of doing business in China. And it continues to impede the repatriation of profits made by foreign companies operating in China.

Trump’s America remains committed to the rule of law, and Trump’s tariffs are the means to enforce it. China has amply demonstrated that it will not respect its commitments unless it is forced to. Now is the best time to exert maximum force to persuade China to change its course.

The clock is ticking, and China’s Communist Party leadership knows that better than anyone. America can afford to wait. China can’t.