China to Be Focus of U.S. Trade Policy This Year, White House Says

By FeaturesDow Jones Newswires

President Donald Trump's "America First" trade policy will be more focused in the coming year on countering China, after a first year tangling with allies ranging from North America to Europe and Asia, a White House economic official said Friday.

"There's a lot of consensus around the viewpoint that China does need to be the focal point, because China's behaviors are causing significant problems for the U.S. economy and for the global trading system," said the official, who has been designated by the White House to speak about coming trade enforcement decisions and negotiations.

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"I'm not going to minimize Nafta and Korus," the official said, referring to the North American Free Trade Agreement with Canada and Mexico, and the U.S.-South Korea free-trade agreement. Mr. Trump has threatened to end them.

"I do think everyone realizes that even if Nafta and Korus aren't working as well as they could, they are only part of the broader concerns we have," he added.

The official declined to say what actions the administration would take against Beijing or when. But he spoke as the White House faces deadlines to decide on trade complaints aimed directly or indirectly at Chinese producers in a wide range of sectors, including solar panels, steel, and aluminum. Officials are also completing a broad investigation of widespread accusations that China improperly forces U.S. companies to give up valuable intellectual property.

"You do see a theme in some of the upcoming decisions the president has to make," the official said. "You have Chinese industrial policy at its core."

A Chinese Embassy spokesman in Washington did not have an immediate response, but referred to recent comments by a Foreign Ministry spokeswoman, Hua Chunying, who said "a large number of facts prove that the economic relations and trade between China and the United States are mutually beneficial.... We are willing to make concerted efforts with the United States to stay committed to building the robust, steady and sound economic relations."

During the 2016 presidential campaign, candidate Trump regularly attacked Chinese trade practices and promised a range of tough actions, including 45% across-the-board tariffs. As president, he has taken a softer line against China than he has against allies like Canada and Japan.

Canada, in addition to pressure over Nafta, faces new U.S. barriers on exports of lumber and airplanes. And Japan had been a chief advocate of the Trans-Pacific Partnership regional trade bloc that Mr. Trump ended early in his term.

At the same time, the president has focused on developing a warm personal relationship with Chinese President Xi Jinping, and regularly said he wasn't pressuring Mr. Xi too much on trade in return for more of his cooperation cracking down on North Korea's nuclear program.

Mr. Trump's heightened emphasis on China this year is likely to attract more political unity than have his attacks on Nafta. At Senate hearings this week, senior Republican lawmakers who have urged the president to be more cautious on shaking up Nafta said they would heartily endorse a harder line against Beijing. "President Trump's priority of confronting the challenges posed by China is a goal that I support," said Utah's Orrin Hatch, chairman of the Senate Finance Committee, which oversees trade legislation.

The emerging strategy on China involves emphasizing enforcement over negotiations with its leaders, and less reliance on the World Trade Organization to settle those disputes, according to a new report issued Friday by the U.S. Trade Representative's Office.

Fifteen years of "cooperative high-level dialogues to effect meaningful and fundamental changes have largely failed," said the report. "Accordingly, the United States intends to focus its efforts on enforcement going forward."

The report said that while the U.S. will still use the WTO, which China entered in 2001, the Geneva organization has failed to police adequately China's state-driven capitalism. The U.S. "erred in supporting China's entry into the WTO," the report said.

But the question remaining is whether any action taken will hurt American consumers and companies.

"We have to make sure that any action we do take doesn't have short-term effects that we regret," the White House official said.

Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com

(END) Dow Jones Newswires

January 19, 2018 18:16 ET (23:16 GMT)

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