Carla Hills: Good News in United States

Jan 26 , 2021

Carla Hills, Former US Trade Representative


Thank you. It is a great privilege to join the distinguished members on this panel to exchange thoughts on what we believe is the way forward with respect to the U.S.-China relations. I must say, I found inspiration in the remarks of all my fellow panelists. And it's been a really wonderful evening. 

But there's no question that the world is experiencing unprecedented turbulence globally and domestically — that the pandemic and its damaging economic effects have adversely affected nations worldwide, and none more so than the United States. 

Relations between the United States and China over the past four years have been marked by turbulence and uncertainty, both economically and politically, and sharply deteriorated in 2020 fueled in part by the economic havoc wreaked by COVID-19, but also by our president: President Trump's unilateral protectionist trade policies and China's more assertive actions. 

Last week, as mentioned, Joe Biden was inaugurated as our 46th, president. Unlike his predecessor, he is a multilateralist and comes to the office with a high level of experience. He spent 36 years in our Senate, served as chairman of the Senate Foreign Relations Committee and served as vice president for eight years in the Obama administration. Key members of his foreign policy team also have substantial international experience and know each other, having worked together in the past, including Antony Blinken, who was nominated as secretary of state and served as deputy national security adviser; Jake Sullivan, nominated as Biden's national security advisor, who served also as a deputy secretary of state; and Catherine Tai, who was nominated as the U.S. trade representative, who served as chief counsel for the Ways and Means Committee, which is the primary committee dealing with trade and economic issues in our country. She was chief counsel for China at the Office of the United States Trade Representative. She speaks Mandarin. 

So as we move forward with a new president and a new team at the helm of our government, some ask whether we will return to the policies of the Obama administration. In light of the changes that have occurred politically and economically, I for one do not see that as a realistic prospect. Others asked whether we're likely to see a continuation of the policies that the United States has implemented with respect to China over the past four years. Since President Biden is a multilateralist who believes in open markets, I do not think that that is a realistic prognosis. 

I do believe there will be significant changes, in how we deal with our international relationships. First and foremost, I believe the tone, in which we deal with all governments, including China, will be far more diplomatic and strategic. President Biden has made clear that his policy toward China will be multifaceted. He has stated that he will rely upon cooperation, where possible, competition, where that is inevitable, and confrontation, where there is a crossing of our red line. 

With the respect to cooperation with China, I believe President Biden as likely to begin focusing on the areas where the two governments have similar objections.

He has mentioned climate, world health and denuclearization as areas where he believes our interests converge, enabling our two governments to work constructively together. He has stated that he believes no progress can be made in these key areas absent the collaboration of the world's two largest economies. 

Following through, on the very first day he had in office, he took action to rejoin the Paris climate accord, the World Health Organization and COVAX. When he speaks of competition, he has made clear that he believes America must up its game, starting at home; strongly believes that to be competitive, whoever you are in today's global market, you need to take action to strengthen your own economy. 

And we need to take action on what he perceives to be our nation's shortcoming, beginning with increasing investment in research and development, education and our infrastructure. He has specifically pointed to the need to upgrade our highways, broadband and our energy grid. And he said these investments must precede the negotiation of any major new trade agreement.

That doesn't mean that he will refrain from dealing with trade issues. I believe he would favor rejoining the Trans Pacific Partnership. His challenge will be how to sell it politically, remembering that a number of congressional members, primarily in the Democratic Party, opposed it vigorously in 2009, when President Obama was still in office. To move it forward will probably require some changes, some additions, similar to what occurred with respect to the U.S.-Mexico-Canada agreement. I also believe that he will try to remove the steel and aluminum tariffs that his predecessor imposed upon our allies, which are adversely affecting our workers, farmers and businesses. These tariffs have not achieved their stated objectives. 

However, I remind you, we will not see a swift removal of tariffs that have been placed on China's goods. Notwithstanding that economists have documented that they are harming the American economy, the political climate in the United States regarding China, both in Congress among the American public has darkened over the past year. He and his team will not want to appear to be soft on China.

And that is why conferences, like the one we're holding tonight (or the morning, depending on where you are) are so important. I believe that the process we face in dealing with these tariffs will be gradual. President Biden has stated that before removing them, he will first consult and work with friends and allies who are adversely affected by the nonmarket policies, such as the restriction on foreign investment, discriminatory subsidies and forced transfers of technology. He, as well as Katherine Tai, who was nominated to serve as U.S. Trade Representative, have substantial experience in dealing with tough issues involving China.

President Biden has said that his aim will be to develop a strategy in concert with allies that focuses on issues where there is agreement that China has failed to meet its commitments and to begin negotiations in those areas where the changes could yield benefits to both sides. 

Yang Jiechi, who served as ambassador to the United States, and currently serves as China's Foreign Minister [Chief of the General Office of the Central Foreign Affairs Commission], and is a member of the Politburo, is expected to be visiting officials in Washington DC this week, perhaps only virtually. But he has many contacts there. And a successful negotiation, whenever it occurs, would not only enable the complainant to resolve issues that discriminate against their companies' trade and investment in China but also provide China with greater certainty and its ability to continue to attract inward investment, which would continue to benefit its overall economy. It will also create bonds that would help us deal with even more severe challenges, including deep concerns as to China's willingness to uphold the commitment to “One country, two systems” with respect to Hong Kong, the militarization in the South China Sea and several other issues. These differences won't be easy to resolve and will take time.

This year marks the 42nd anniversary of the normalization of U.S.-China relations. The gains made in the intervening four decades have been hugely beneficial to both sides. The goal on both sides must be to increase areas of collaboration and to reduce areas of friction. We should be inspired by our 41st president, George Herbert Walker Bush, who served as our envoy to China in the 70s and skillfully led our nation's response to the Tian'anmen crisis. In his Chinese diaries, published in 2007, he stated that one of my dreams for the world is that these two powerful giants will continue working together toward full partnership and friendship. That will bring peace and prosperity to people everywhere. Let's hope that we can begin to work together and achieve his dream. And I thank you for inviting me to participate.