U.S. Secretary of Commerce Wilbur Ross delivered wide-ranging remarks at the National Press Club Headliners Luncheon this week, touching on Chinese (and even European) trade protectionism, the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), among other things.
“Both China and Europe eloquently espouse free-trade rhetoric, but — in actual practice — are far more protectionist than the United States,” Ross said, according to a transcript posted on the Department of Commerce website. “Our trade policy’s main objective is to make their real-world behavior match their free-trade speeches.”
Ross’ speech comes as tensions between the U.S. and China on trade have ramped up in recent weeks. Last month, President Trump announced the possibility of $50 billion in tariffs on Chinese, which yielded a reciprocal response from Beijing. Not long after, Trump raised the threat of a potential additional $100 million in tariffs. U.S. and Chinese trade officials met in China earlier this month to discuss trade, meeting that yielded little in the way of breakthroughs, according to media reports.
Ross called out China for not abiding by WTO rules, forced technology transfers for companies looking to do business there and outright intellectual property theft.
Times have changed since World War II, and old negotiations and concessions are no longer appropriate for the current trade landscape, he argued.
“Just after World War II, it was U.S. policy to rehabilitate Europe and Asia suffering from the ravages of war,” he said. “At that time, the United States was the unchallenged world economic power and had regular trade surpluses. We created GATT, which morphed later into the WTO. We made systematic trade concessions to which we remain bound today, decades later. The policy error was that we did not time-denominate those concessions, or provide other mechanisms to adjust policy as conditions changed.
“Concessions made to China or Europe that might have been totally correct 50 years ago are simply no longer appropriate today. Yet, we are locked into the present trading system with rules created for a different era.”
Ross also lamented the fact that despite the U.S.’s economic stature, it only has one vote at the WTO.
Ross also went on the attack with respect to NAFTA, which has been the subject of renegotiation talks since last fall.
“NAFTA was to become a protective wall around the United States, Canada, and Mexico, for our collective benefit,” he said. “But NAFTA did not stop Mexico, which then had high auto tariffs on non-NAFTA countries, from signing a Free Trade Agreement with Europe.That agreement permits Mexican-produced autos to enter Europe duty-free while auto producers making cars in the United States remain subject to Europe’s 10 percent tariff.
“Automakers seeking exports to Europe derive several times more benefit from this tariff anomaly than from lower Mexican labor costs when they move a plant to Mexico.”
The secretary also addressed the recent meetings between U.S. and Chinese trade officials in China.
“We negotiated with a delegation of senior Chinese leaders from its Ministries of Finance and Commerce, and the People’s Bank of China, led by Vice Premier Liu He,” he said. “Before landing in China, we sent them an extremely detailed list of our needs, and they responded with a similarly detailed, but quite different list of proposals. The gap is wide.”
Chinese officials are expected to be in Washington, D.C., this week to continue the discussion on trade.