Okay, now USTR Robert Lighthizer’s cautiously worded enforcement testimony starts to take on a fuller context. When Ambassador Lighthizer was testifying before the mostly decepticon House Ways and Means Committee, he started to outline his newly designed trade enforcement mechanism… but he stopped; he didn’t want to reveal too much.
Now listen to Larry Kudlow describe “enforcement”. WATCH:
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If you watched the USTR testimony you would have seen how the “enforcement” mechanism within the U.S-China trade negotiations was the priority for Lighthizer’s focus; and he specifically mentioned “layered” enforcement triggers, specific to each sector, and issue.
CTH has never seen a U.S. Trade Representative so structurally willing to clear-cut the entire bamboo forest if needed. Lighthizer is intensely focused on enforcement.
Congressional reps were focusing most questions around Chinese purchases of U.S. goods. Lighthizer was blowing through those questions like annoying gnats. That’s not the focus of his structural engagement with the Chinese team. Lighthizer is going much deeper, into issues of much greater consequence than simply purchases via imports/exports.
While increased Chinese purchases to lower the deficit are a part of the goal, they are a very small part of the goal. The protection of U.S. intellectual property; the removal of non-tariff trade barriers; the protection of U.S. ownership rights as Americans operate inside China; the confrontation of currency manipulation, and the sector by sector enforcement provisions are Lighthizer’s primary objective.
If you overlay the comments by NEC Chairman Larry Kudlow (above), with the insightful commentary about ‘enforcement’ by USTR Lighthizer earlier, we can see the picture emerging.
Lighthizer wasn’t specific, Kudlow gave more detail.
What Kudlow is outlining is what Lighthizer hinted toward.
Each of the sectors within the U.S-China trade agreement will have their own specific multi-staged enforcement mechanism that triggers one-way tariffs if China violates the terms; and China cannot retaliate.
Each trade sector will be protected on: [1] intellectual property rights (copyright, patents etc); [2] non tariff barriers (artificial Chinese regulatory hurdles); [3] private ownership external to the controlling reach of Chinese state-owned dictates; [4] as well as financial access and larger currency manipulation schemes.
Within each trade sector; and upon each protected aspect; Lighthizer is building-in a multi-tiered tariff system that would immediately punish the Chinese State-Owned system (all companies therein) with staged, one-way tariffs and countervailing duties that cannot be avoided and China cannot retaliate against.
In essence, and in practice, it sounds like the sector-specific American product protection means: if China violates the sector-specific terms, any terms, the equivalent (or closest equivalent) Chinese product would automatically cost more…. and the U.S. product would cost less. An enforcement system giving U.S. producers and owners an immediate benefit; and giving China an immediate punishment.
[This would also likely apply to U.S. companies with Chinese controlling interests.]
This sounds like the enforcement framework within a heavy MOU; that is then guaranteed to transfer into the final, legal and binding agreement; and be applied to every element, within every sector, across the entirety of the U.S. commerce relationship with China.
Lighthizer described “steps” and “layers” of this protection at every level, and across every element, of commercial engagement with China. However, Lighthizer didn’t describe the punishment; it sounds like Larry Kudlow did.
