US-China Trade Hearing Shows Partisan Divide on Phase One Deal

Rep. Kevin Brady of Texas, the top Republican on the panel, said, “For decades, China has cheated and American workers and businesses have paid the price. President after president and Congress after Congress made little progress until Trump confronted them head on.”

It wasn't just Republicans who praised the president's tariff-forward approach with China. Thea Lee, president of the left-of-center Economic Policy Institute, said tariffs are “a welcome shift from previous administrations' inaction and timidity.” But she said she questions whether the export targets in the agreement can and will be met, and said labor rights in China are more important than other issues focused on in the negotiations.

The title of the hearing was U.S.-China Trade Competition, and Massachusetts Institute of Technology President Rafael Reif said the House members were focusing on the wrong part of that phrase -- trade, rather than competition. He said the U.S. “needs to do more to capitalize on our own strengths,” including our openness to immigrants, world-class research universities. He said policy needs to be formed to do better about moving fundamental research into commercial applications.

And, he said, it's wrong to think “China’s rise is being fueled solely by stealth and subterfuge.”

The panel had two farmers -- the president of the Illinois Farm Bureau, who said farmers in his state are optimistic about the phase one agreement, and Tim Dufault, a wheat and soybean farmer in Crookston, Minn., who is decidedly not optimistic. Rep. Bill Pascrell, D-N.J., asked Dufault if he would rather have access to China than payments from the administration, and Dufault said yes. He also said the purchases are promises, while Chinese retaliatory tariffs are still real. China's agreement to drop some non-tariff barriers on biotech or sanitary measures “are singles when we need a home run.”

Pascrell said, “My friends on the other side they like to decry socialism. I agree with them. Trump is embracing socialism to bribe farmers in the United States of America.” Of phase one, Pascrell said, “His so-called deal is named bupkis. It is nothing but a way to create a fake victory and cover his rear.”

Tim Stratford, a former assistant U.S. trade representative to China from 2005 to 2010, said it's unfair to say that phase one doesn't tackle industrial subsidies or state-owned enterprises. “Phase one has to be looked at very much [as] a work in progress,” he said, since it's a temporary truce, but he said it's going to be very challenging to address the harder issues now, because China is working as fast as it can to move away from its technology dependence on American companies. If it can do that, it will be better positioned to resist U.S. pressure. “The things we’re dissatisfied about, they’re not prepared to change,” said Stratford, who practices law in Beijing.

Rep. Tom Rice, R-S.C., said it's absolutely fascinating how resilient the economy has been in the face of higher tariffs on such a large swath of Chinese imports. He said past presidents should have confronted China over its subsidies, and now we “finally have a president with the chutzpah to do it.” He added, “Somebody had to take China on rather than just talking about it.”

Rice said the economic disruption from the tariffs has been “absolutely minimal,” with GDP growth of more than 2 percent annually, growing wages, and almost no inflation. He complained that Democrats on the panel were saying phase one doesn't go far enough. “That’s not news. Everybody knows that,” he said. “I’m amazed at how quickly it’s come along.”