US companies still fret that they will get caught in the crossfire of a trade war between the US and China.
The American Chamber of Commerce in China (AmCham) said in a report published yesterday that its member companies are worried that investigations into China’s intellectual property practices and industrial policies could cause tensions to flare again.
It was written before the White House announced on Tuesday that it would push ahead with tariffs, despite an earlier agreement to put them on hold.
US President Donald Trump’s earlier threats of tariff hikes resulted in very intense negotiations with Beijing “in a way that we haven’t seen for so many years,” AmCham chairman William Zarit said.
Ahead of US Secretary of Commerce Wilbur Ross’s arrival in China on Saturday for talks, Zarit said companies hope Beijing can be persuaded to “level the playing field” by easing curbs on foreign investment and business activity in its state-dominated economy.
“I wouldn’t say we are in favor of, specifically, export controls, investment restrictions,” Zarit said.
However, US firms want equal treatment “and this seems to be one of the ways to do that,” he said.
US companies “would only be in favor of them to the extent that we can level the playing field,” Zarit told a news conference.
“Bilateral relations between China and the US have become an increasing concern to US businesses in China,” AmCham said in its annual American Business in China white paper.
“Trade tensions between the US and China, particularly those surrounding the Section 232 and 301 investigations, have raised serious concerns that such tensions will escalate into a trade war,” it said.
“China’s success means that it can no longer credibly defend protectionist policies on the grounds that it is still a ‘developing country,’” the report said
The tariff threat is a “very powerful” negotiating tactic ahead of the weekend talks, said Lester Ross, a lawyer who is chairman AmCham’s policy committee.
However, tariffs are a tax on US consumers and a blunt tool to address “very complex problems that hamper trade and investment relationships,” he said.
The paper makes note of US government concerns over cybertheft, forced technology transfer and discriminatory industrial policies.
It urged the Chinese government to address these issues in part by ensuring equal participation for foreign and domestic firms in the “Made in China 2025” initiative, as well as investigating the use of tax credits to support the scheme as an alternative to subsidies.
The report also called on China to negotiate a bilateral investment treaty with the US; implement market opening measures in more sectors; ensure that national security reviews are narrowly applied; develop a comprehensive trade secrets law; open standards development technical committees to foreign-invested enterprises; and improve transparency and equal enforcement of laws and regulations by extending comment periods on new rules, clarifying regulations and issuing public guidance.
Additional reporting by AP
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