Trade deal won’t get done without action on forced tech transfers, US Chamber of Commerce lobbyist Myron Brilliant says

12-Jan-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Any trade deal brokered between Washington and Beijing must include a Chinese central government measure aimed at ending forced technology transfer practices in China, backed up by enforcement, a prominent US business lobbyist said on Thursday.

“The Chinese have been saying that they don’t have any policy around forced technology transfers, but we know at the local level things are being implemented differently,” said Myron Brilliant, head of international affairs at the US Chamber of Commerce, referring to the practice of requiring foreign companies to share patented technology in exchange for access to the Chinese market.

“The question is what kind of directive will the [Chinese] central government agree to and how will they enforce it at the local level, and what kind of enforcement mechanism will be agreed to in a bilateral context?” said Brilliant, who is also executive vice-president of the influential business lobbying group.

Moreover, Brilliant, who is in close communication with US trade officials, predicted: “There isn’t going to be any final package that doesn’t have an enforcement component.”

 (Yahoo News Singapore)

(Yahoo News Singapore)

Brilliant has met senior US trade officials over the course of the trade conflict, including US Trade Representative Robert Lighthiser, the lead negotiator of the current 90-day round of talks, which are due to end on March 1.

His remarks, made on the sidelines of an event at the chamber’s Washington headquarters, came after mid-level negotiations concluded in Beijing this week, in which officials sought to clear the way for a high-stakes round of talks at the senior level.

Liu He, China’s vice-premier and chief trade negotiator, is expected to visit Washington for those negotiations. While the dates for them have not been announced, Brilliant said they should occur before the Lunar New Year holiday in early February.

“I still don’t think [Liu's visit is] going to get us to the final stages, and ultimately the deal is going to have to be blessed by the two leaders,” Brilliant said, adding that the progress achieved in Beijing was encouraging but should not be overstated.

Neither side has indicated in detail what if any new consensus was reached at those three-day talks, but the trade representative’s office said on Wednesday that officials had discussed the need for “any agreement to provide for complete implementation subject to ongoing verification and effective enforcement”.

In response to a question about forced technology transfer on Thursday, Chinese Ministry of Commerce spokesman Gao Feng said in Beijing that such “structural issues were an important part of these talks”, but did not say what particular progress had been achieved.

Observers have pointed to domestic pressures facing both countries’ leaders as a catalyst for a resolution.

“Both sides are incentivised to reach an agreement,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics. “China’s economy is slowing for a number of reasons, which an agreement could address.

“In the US, as the tax cuts effects continue to wear off, we will see that tariffs have a negative effect. If economic rationale prevails, at least we should see an agreement.”

A Chinese government source told the South China Morning Post on Thursday that China would be willing to agree to some of the US demands because they were “feasible” and in line with Beijing’s own interests. They did not elaborate on which demands in particular Beijing would welcome.

But negotiations surrounding structural reform were bound to be difficult because they went “through the heart of China’s industry policy and 2025 aspirations”, said former US trade representative Michael Froman on Thursday, speaking at an Asia Society event in Washington.

Froman, who served as chief trade negotiator during the Obama administration, said Beijing would more readily engage in a “shopping list” track of negotiations: officials would agree to buy an as-yet unspecified amount of US goods and services.

“Chinese officials told me some time ago that ‘We understand how important it is for the president to have tweetable deliverables’,” said Froman, referring to US President Donald Trump, whose publicly aired grievances about China have overwhelmingly concerned the trade imbalance between the two countries rather than structural reform by China.

Trump said on Thursday that his administration was having “tremendous success with China” in the negotiations.



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