Top Trade Officials Seek Cooperation With China

Two top Obama administration trade officials have made lengthy comments regarding trade and
investments with China, emphasizing the need for cooperation and diplomacy to address the worldwide
economic crisis. They made only scant references to problems with China trade, such as the trade
deficit, currency manipulation, intellectual property violations and illegal subsidies; but they
emphasized the need for a “positive, cooperative and comprehensive relationship.”

In an address at Peking University in Beijing, Treasury Secretary Timothy Geithner said
“global problems will not be resolved without US/China cooperation.” He added that the United
States and China already are working together to help shape a strong global strategy to contain the
world global economic crisis and lay the foundation for recovery.

Turning to trade issues, Geithner said China will have to make a “very substantial shift”
away from export growth to growth made possible by more domestic consumption. In addition, both
countries must cooperate to ensure that the global trade and investment environment remains open,
he said, and opportunities for trade need to expand.

In a brief reference to one of the thorniest issues – China’s alleged currency manipulation
to gain an advantage in trade – Geithner said the Chinese government needs to “continue progress
toward a more flexible exchange rate regime.” There was no mention of any of the retaliatory
measures being considered by Congress with respect to currency manipulation or illegal subsidies.

In an address here at home  at the annual meeting of the US-China Business Council, US
Trade Representative Ron Kirk said President Barack Obama believes the United States needs a “new
fundamental framework for trade” that will make Americans feel the benefits of trade far more than
its costs. He said the administration believes the United States needs to have trade agreements
that incorporate strong labor and environmental standards and that it needs to do a better job of
enforcing its trade agreements. He warned that China must do more to enforce intellectual property
rights and standards for the environment and labor and product safety.

While Kirk said the “preferred course” for dealing with Chinese trade issues is diplomacy, he
warned that if diplomacy fails, the United States will not hesitate to use all of the tools at its
disposal including the dispute mechanism in the World Trade Organization and applying US trade
remedies “fully and fairly.”

Kirk said the administration is “committed to working positively and cooperatively with
China,” but that “we will always put the interests of American businesses and workers at the fore.”

June 9, 2009