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Does The U.S. Or China Have More Leverage In Ongoing Trade Talks?


Next we're going to hear from someone who's negotiated on trade policy with China. Amy Celico worked on China trade policy under President George W. Bush. She now advises U.S. companies who are doing business in China. Thank you for coming into the studio.

AMY CELICO: Great to be with you.

CORNISH: From the point of view of you and your clients, these tariffs - have they kind of hurt China and been a win for the U.S., put us in a better position for these trade talks?

CELICO: Well, I certainly agree with President Trump that that does give the U.S. side leverage. The Chinese certainly don't want these tariffs to continue as they're looking at their own economy softening. And the tariffs will continue to hurt and hurt in a much more significant way if the tariff rate goes up on March 1. And so there is an incentive for the Chinese to want to make a deal. However, I think in the U.S., President Trump and the administration also face pressures to find a way forward rather than simply walking away from a deal and increasing the tariffs because that would hurt our economy, too.

CORNISH: What are some of those pressures?

CELICO: Some of those pressures of course are the fact that American businesses want to be in China. They want to be - American farmers, American companies want to be trading with China. And without having what will become this year the largest consumer market in the world - China - as a market for our goods and services, our companies will face pressure. And the stock market will dip. And as we have seen over the past few months, the administration is sensitive to those fluctuations in the markets.

CORNISH: What can you tell us about China to help us understand what it means to sit down and negotiate, especially when you're talking about issues that are bigger than, say, as Scott reported, a soybean order - right? - trying to get at longtime structural grievances that the U.S. has had, whether it's market access or intellectual property theft?

CELICO: Like you said, Audie, these are longtime concerns that the U.S. government has had with China. And so I have a lot of sympathy for the negotiators on the U.S. side right now trying to make progress where progress hasn't been achieved in the past. The Chinese government is looking in a more long-term way at these issues about what it is willing to give. The impact on the domestic economy...

CORNISH: Is that different from, say, the George W. Bush years that - where you were there?

CELICO: Well, I will say I think that there is a coming realization within China that foreign investors need to be in the market for China to meet its own economic development goals. And I think when we're talking about the George W. Bush administration years where China of course was doing very well, growing at record rates, they were starting to talk about indigenous innovation and starting to say, maybe we don't need foreign investment as much; we feel very strong now. Today, this year, this month, President Xi talked about the risks to the country. And in his speech earlier this month, he talked about the softening economy as a real risk.

CORNISH: What leverage do you think the Chinese have over the U.S.?

CELICO: I think the Chinese, like I said, can look at this in a more long-term way. And I think they recognize that the Trump administration wants and, in some ways, needs a win on trade. I don't think anyone expects that some kind of trade truce or de-escalation of trade tensions is going to eliminate the many, many growing tensions in the bilateral relationship.

CORNISH: But I ask because you heard the president say earlier that, this may come down to a conversation between me and President Xi. You know the players involved. What does that mean - is - given this president's temperament and approach when it comes to trade?

CELICO: I think the Chinese probably are hoping that if it is left to President Trump to negotiate a deal with President Xi, that he may accept some superficial gains that maybe his own administration and experts on trade policy would have said aren't enough to call it a victory. And so the Chinese recognize that, I think very much welcome a high-level meeting even in order to postpone the end of the talks. President Xi and President Trump together declared this was going to be a 90-day process. But even in December, President Trump hinted that if it needed more time, he would give more time. And so those tariff rates may not be going up on March 2 anyway.

CORNISH: Where do you see points of compromise?

CELICO: Again, I think that the Chinese government is starting to recognize that with its slowing economy, foreign investors in the market actually will help the economy meet some of its consumption-led growth goals. And so levelling the playing field for foreign players is something that is also in China's interest - the same things we've been asking for for more than a decade. And so there is an area of compromise - of course, also purchases. The U.S. government has said that they do want to see the trade imbalance righted in some ways. And so while we're not talking about eliminating a massive trade deficit, we are talking about that being an area where both sides win.

CORNISH: Amy Celico leads the China practice at the Albright Stonebridge Group. Thank you so much.

CELICO: Thank you. Transcript provided by NPR, Copyright NPR.

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