Earlier today, via Tweet, President Trump announced the ‘phase-one’ agreement between the U.S. and China will be signed January 15, 2020.
As U.S. Trade Representative Robert Lighthizer previously stated this very challenging agreement will be the first-ever attempted trade deal between a state-run economy and a free-market economy. It will take time to see if communist China will actually follow-through on the terms and conditions.
Ambassador Lighthizer noted the principle challenge is generating an enforceable set of standards -within a written agreement- between a totally controlled communist economic system (China) and a free-market system (USA). No other nation has ever tried, and there is no preexisting trade agreement to facilitate a mapping. What Lighthizer was/is constructing will be what all nations will start to use going forward. This is historic stuff.
Arguably, next to President Trump, USTR Lighthizer is one of the most consequential members of the administration. What he was/is constructing, with the guidance of President Trump, is going to influence generations of Americans.
[Transcript] MARGARET BRENNAN: This week, the U.S. and China agreed on the first phase of a trade deal that would roll back some American tariffs. It’s expected to be signed in early January. We’re joined now by the U.S. Trade Representative, Robert Lighthizer, the top negotiator in those talks with Chinese officials. Good to have you here.
U.S. TRADE REPRESENTATIVE ROBERT LIGHTHIZER: Thank you for having me, MARGARET.
MARGARET BRENNAN: It’s huge to have the two largest economies in the world cool off some of these tensions that have been rattling the global economy. But I want to get to some of the details here. China says still needs to be proofread, still needs to be translated. Is you being here today a sign this is done, this deal’s not falling apart?
AMB. LIGHTHIZER: So first of all, this is done. This is something that happens in every agreement. There’s a translation period. There are some scrubs. This is totally done. Absolutely. But can I make one point? Because I think it’s really important. Friday was probably the most momentous day in trade history ever. That day we submitted the USMCA, the Mexico-Canada Agreement with bipartisan support and support of business, labor, agriculture. We actually introduced that into the House and the Senate on this, which is about 1.4 trillion dollars worth of the economy- I mean of- of trade. And then in addition to this, which is about 600 billion, so that’s literally about half of total trade were announced on the same day. It was extremely momentous and indicative of where we’re going, what this president has accomplished.
MARGARET BRENNAN: Well, that is significant and I do want to get to the USMCA. But because the China deal just happened–
AMB. LIGHTHIZER: Right.
MARGARET BRENNAN: –and we know so little about it, I’d like to get some more detail from you. You said this is set.
AMB. LIGHTHIZER: Yes.
MARGARET BRENNAN: You expect the signing in early January still.
AMB. LIGHTHIZER: Right.
MARGARET BRENNAN: What gives President Trump the confidence to say China’s going to go out and buy $50 billion worth of agricultural goods because Beijing hasn’t said that number?
AMB. LIGHTHIZER: First of all- let me say first of all, I would say this. When we look at this agreement, we have to look at where we are. We have an American system, and we have a Chinese system. And we’re trying to figure out a way to have these two become integrated. That’s what’s in our interest. A phase one deal does the following: one, it keeps in place three hundred and eighty billion dollars worth of tariffs to defend, protect U.S. technology. So that’s one part of it. Another part of it is very important structural changes. This is not about just agricultural and other purchases, although I’ll get to that in a second. It’s very important. It has IP. It has- it has–
MARGARET BRENNAN: Intellectual property–
AMB. LIGHTHIZER: –technology. It has- it has currency. It has financial services. There’s a lot of very- the next thing is, it’s- it’s enforceable. There’s an enforcement provision that lasts 90 days- it takes 90 days and you get real, real enforcement. The United States can then take an action if China doesn’t keep its commitments–
MARGARET BRENNAN: Put the tariffs back on?
AMB. LIGHTHIZER: Well, you would take a proportionate reaction like we do in every other trade agreement. So that’s what we expect. And finally, we’ll- we’ll find out whether this works or not. We have an enforcement mechanism. But ultimately, whether this whole agreement works is going to be determined by who’s making the decisions in China, not in the United States. If the hardliners are making the decisions, we’re going to get one outcome. If- if the reformers are making the decisions, which is what we hope, then we’re going to get another outcome. This is a- the way to think about this deal, is this is a first step in trying to integrate two very different systems to the benefit of both of us.
MARGARET BRENNAN: But that $50 billion number, is that in writing?
AMB. LIGHTHIZER: Absolutely. So- so here’s what’s in writing. We- we have a list that will go manufacturing, agriculture, services, energy and the like. There’ll be a total for each one of those. Overall, it’s a minimum of 200 billion dollars. Keep in mind, by the second year, we will just about double exports of goods to China, if this- if this agreement is in place. Double exports. We had about 128 billion dollars in 2017. We’re going to go up at least by a hundred, probably a little over one hundred. And in terms of the agriculture numbers, what we have are specific breakdowns by products and we have a commitment for 40 to 50 billion dollars in sales. You could think of it as 80 to 100 billion dollars in new sales for agriculture over the course of the next two years. Just massive numbers.
MARGARET BRENNAN: And that is important in no small part because also this is a key political constituency for President Trump going into the election, to take some pain off of American farmers who’ve been feeling it pretty strongly. I mean, the USDA projects that the soybean market won’t recover, I think til 2026 because of the damage that has been done to it.
AMB. LIGHTHIZER: Listen–
MARGARET BRENNAN: Is that- how much of that, that political calculus, factored into the agreement to do this in phases? Because you didn’t want to do it in phases.
AMB. LIGHTHIZER: Well, it was MARGARET–
MARGARET BRENNAN: The Chinese did.
AMB. LIGHTHIZER: It was always going to be in phases. The question was, how big was the first phase? Anyone who thinks you’re going to take their system and our system that have- that have worked in a very unbalanced way for the United States and in- in one stroke of the pen change all of that is foolish. The president is not foolish. He’s very smart. The question was, how big- how big was the first phase going to be? This is going to take years. We’re not going to resolve these differences very quickly. On the agriculture point, that’s a good point. Let me say this. If you look at American agriculture in between USMCA, which is Canada and Mexico, China, Japan, Korea, we have rewritten the rules in favor of American agriculture on more than half, 56 percent, of all of our exports from agriculture. This, over the course of the last year, what this president has accomplished in this area, is remarkable. And you’re already- any one of these deals would have been monstrous. And the fact that we have all of them together–
MARGARET BRENNAN: Right.
AMB. LIGHTHIZER: –is- is great for agriculture.
MARGARET BRENNAN: I just want to button up on China, though, because the promise here was to do the things that American businesses have been complaining about for years–
AMB. LIGHTHIZER: Absolutely.
MARGARET BRENNAN: Not just the intellectual property theft, but subsidizing corporations in China in an unfair way for Americans. Cybertheft. None of that’s here.
AMB. LIGHTHIZER: Well–
MARGARET BRENNAN: That’s phase two. When do you start negotiating that?
AMB. LIGHTHIZER: So let me say first of all–
MARGARET BRENNAN: Is there a date?
AMB. LIGHTHIZER: Let’s talk about what’s here rather than what’s not here.
MARGARET BRENNAN: But that’s huge.
AMB. LIGHTHIZER: Absolute rules on–
MARGARET BRENNAN: That’s what President Trump said this whole trade war was starting on.
AMB. LIGHTHIZER: Look at tech- tech transfer is huge. That’s what’s in the 301 report. Look, we had a plan that- the president came up with a plan. We’ve been following it for two and a half years. We are right where we hope to be. Tech transfer, real commitments, IP, real specific commitments. I mean, this agreement is 86 pages long of detail. Agricultural barriers removed in many cases, financial services opening, currency. This is a real structural change. Is it going to solve all the problems? No. Did we expect it to? No. Absolutely not.
MARGARET BRENNAN: Do- the president said those talks in to start immediately, though. Do you have a date?
AMB. LIGHTHIZER: We don’t have a date, no. What we have to do is get this- we have to get the- the final translations worked out, the formalities. We’re going to sign this agreement. But I’ll tell you this. The second Phase 2 is going to be determined also by how we implement phase one. Phase one is going to be implemented right to the- right down to every detail.
MARGARET BRENNAN: I want to–
AMB. LIGHTHIZER: It really is a remarkable agreement, but it’s not going to solve all the problems.
MARGARET BRENNAN: Well, we need to take a short break. We’ll be back with US Trade Representative Lighthizer in a moment.
MARGARET BRENNAN: Welcome back to Face the Nation and our conversation with US Trade representative Robert Lighthizer. Let’s talk about the other agreement. The House is set, Democratic controlled House, is set to vote on the USMCA, the free trade deal with Mexico and Canada that’s been rewritten. This is a win for the president to get this through, but Nanc- Speaker Pelosi and her caucus did have some last minute maneuvers here. Speaker Pelosi is quoted as saying we ate their lunch when it comes to the Trump administration.
AMB. LIGHTHIZER: So–
MARGARET BRENNAN: How do you respond to that?
AMB. LIGHTHIZER: We had a great–
MARGARET BRENNAN: You made some concessions to labor here. That was not insignificant and it did irk some Republicans.
AMB. LIGHTHIZER: So- so- so let me- let me make a point about that. We had an election and the Democrats won the House, number one. Number two, it was always my plan and I was criticized for this, as you know, it was always my plan that this should be a Trump trade policy. And a Trump trade policy is going to get a lot of Democratic support. Remember, most of these working people voted for the president of the United States. These are- these are not his enemies. So what did we concede on? We conceded on biologics. Yes. That was a move away from what I wanted, for sure. But labor enforcement? There’s nothing about being against labor enforcement that’s Republican. The president wants Mexico to enforce its labor laws. He doesn’t want American manufacturing workers to have to compete with people who are- who are operating in- in- in very difficult conditions. So there’s–
MARGARET BRENNAN: But you don’t think there’s a political cost because Republican senators were annoyed to be cut out of this last phase?
AMB. LIGHTHIZER: Look it there are- there are always process issues. This bill is better now with the exception of biologics, which is a big exception. With the exception of biologics, it’s more enforceable and it’s better for American workers and American manufacturers and agriculture workers than it was before. For sure.
MARGARET BRENNAN: Mr. Lighthizer, Thank you very much for joining us.
AMB. LIGHTHIZER: Thank you for having me.