U.S.-China Trade Talks Aim for Mutually Beneficial Agreements

The Richard Nixon Presidential Library located in Yorba Linda, southern California, is to be the venue for high-level trade talks between the United States and China on 16 September 2008. The meeting will mark the 25th anniversary of the US-China Joint Commission on Commerce and Trade (JCCT) and it is anticipated that agreements will be reached to the benefit of both parties, while some thorny issues will be addressed and hopefully resolved.

Established in 1983, the JCCT is a forum for high-level dialogue relating to bilateral trade issues, as well as being a platform for the promotion of commercial relations between the United States and China. It seems fitting that these talks will be held in the Richard Nixon Presidential Library, as in 1972 Nixon was the first United States president to visit the country following the establishment of the People’s Republic of China in 1949.

Among the issues to be discussed is U.S. concerns with regard to China’s currency, the yuan, which critics believe is undervalued, thereby contributing to China’s trade surplus and the enormous trade imbalance between the two countries. The U.S. trade deficit with China reached a record high of 256.2 billion dollars last year. Since China de-linked the yuan from the US$ in July 2005, the yuan has appreciated by approximately 20 percent.

It is believed that the U.S. will press China on the issue of its ongoing ban on U.S. beef. As was the case with many other countries, China banned the importation of U.S. beef following the first reported case of mad cow disease in the U.S. in December 2003. However, while other countries have lifted the ban, China has kept it in place, despite a conditional agreement reached in April 2006 to lift the ban.

A particularly thorny issue is that of China’s high rates of counterfeiting of designer label goods and piracy of software, CDs, DVDs and similar items. This is an issue which the U.S. has brought to the attention of the WTO in the past, but despite some steps being taken by Chinese authorities to resolve the problem, these measures have had limited success. For example, whereas WTO rules stipulate that confiscated goods be kept out of the marketplace, in the case of counterfeit clothing China’s customs officials reportedly allow the sale of these goods on condition that fake designer labels are removed. This means that getting caught by customs is not really a deterrent.

In turn, China is expected to complain about duties imposed by the United States restricting certain Chinese goods imports. It is also anticipated that a case will be put forward for the restrictions to be lifted on the importation of Chinese origin high-technology products for use both commercially and in the military. Many of the import restrictions are as a response to protests by U.S. manufacturers that were losing market share to cheap Chinese imports.

While the talks are unlikely to change overall trade flows, certain industries, including telecommunications and medical devices, could see significant benefits. Moreover, it is hoped that continued dialogue will further cement the trade relationship between the United States and China.