Chinese attendants of USTR hearing say destroying a mutually beneficial economic relationship is good for no one

By Ni Hao Source:Global Times Published: 2018/9/6 17:43:40

A truck driver stands at the Port of Yingkou, Northeast China's Liaoning Province on July 18. Photo: VCG

Despite their small amounts, Chinese attendants of August's weeklong USTR hearing in Washington DC were able to articulate their doubts and oppose proposed tariffs on $200 billion worth of Chinese goods. Three Chinese attendants of the hearing provided a detailed account of the event in an exclusive interview with the Global Times, amid fears the US could nevertheless impose the tariffs by the end of the week.

After China and the US slapped tariffs on $50 billion worth of each other's exports in July, the trade war between the world's two largest economies showed no signs of ending.

Starting on August 22, a weeklong hearing was held by the Office of the US Trade Representative (USTR) to solicit public opinion about proposed tariffs on an additional $200 billion worth of Chinese exports, levies that could be as high as 25 percent.

During a week of intense debates, over 90 percent of the US representatives present expressed their discontent and opposition to the proposed US tariffs.

A small group of Chinese representatives also spoke at the hearing, bringing their argument before a committee about "Section 301" of the investigation.

The lawyer

Zhu Haicheng, a lawyer from Zhejiang Chession Law Firm, was the only Chinese lawyer present at the hearing. Zhu said he felt a commitment to defend Chinese companies' lawful rights with his "legal weapon."

At the hearing, Zhu questioned the legitimacy of the US' 301 investigation. According to Zhu, the investigation is flawed.

First, the US circumvented the WTO and used its national laws to launch a unilateral sanction on China. This amounts to "lynching" and it is not acceptable to China, he said.

Second, the USTR has not fulfilled its commitment that it made after a trade dispute with the EU in 1998, when it vowed not to use 301 investigations again and to only follow a trade dispute settlement mechanism under the WTO.

Third, the USTR seemed to have had its independence compromised by following the whims of the White House at the hearing.

"I threw out my doubts on that issue, rather than sticking my arguments to a certain product. The unique value and benefit of being a Chinese lawyer at the hearing was that I was in less bondage than my US counterparts, and I could express my doubts freely, without any reservation," Zhu told the Global Times.

"I feel that more Chinese companies should be present at such hearings. This is the kind of opportunity you don't want to miss; this is the opportunity when you get to speak to the world," Zhu remarked.

The entrepreneur

"Among the attendants of the hearing, there were only a small number of Chinese," said Xiao Zhiyuan, general manager of the international department of Chinese floor maker Jiangsu BBL Flooring Co. About 90 percent of the attendants were representatives from US companies or industries, Xiao noted.

He also said that the US market is a very important strategic market for his company and a 25 percent tariff would mean the end of business for most China-based flooring companies.

Xiao said he therefore had his doubts about attending the hearing, as a failed debate would bode ill for both his personal and entrepreneurial reputations, but he decided to go anyway.

"If we chose to do nothing, we were doomed to fail. Since we tried, there is at least a chance of success," Xiao told the Global Times.

Arriving in Washington DC on August 18, Xiao buried himself in fine-tuning rhetoric, recited statements, controlled his punctuality of speech and worked closely with US lawyers hired by the China National Forest Products Industry Association.

Moreover, his team proofread his planned statements on his industry and prepared point-to-point counterarguments.

Xiao made his statement on August 23, speaking for his company and the industry as a whole.

He pointed out that the flooring industry in China is labor-intensive but experiencing a wave of innovation, adding that it has nothing to do with "intellectual property (IP) rights infringement and technology transfer."

The Chinese flooring industry pays a franchise fee to foreign companies every year and respects IP rights, Xiao said.

The thin margin of the industry and the fact that some products are only produced in China means that US buyers in the flooring and real estate industries will take two years to switch suppliers under the best circumstances and low- and middle-income American households will suffer, according to Xiao.

"As a matter of fact, the US officials who listened to my counterargument have zero professional knowledge on the flooring industry, and the questions they raised did not sound like the ones that should come out the mouths of professionals. I had to do a lot of explaining and then engage in debate," Xiao said.

After the hearing was over, he seized the opportunity to provide supplementary materials in the additional time allowed by the US International Trade Commission and then visited US partners, who, according to Xiao, were perplexed at the prospect of more tariffs.

After leaving the US, Xiao visited some production facilities in Vietnam to explore an alternative production base.

"Hoping for the best but planning for the worst, as a company we are doing everything we can to cope with this trade war started by the US. But a crisis may end up being an opportunity," Xiao said.

The scholar

The hearing was the third consecutive tariff hearing that Yi Bo, an associate professor of law at China's Southeast University, had attended. The two previous hearings were held in May and July respectively before the earlier rounds of tariffs were enacted.

Yi, an academic focusing on WTO law, pointed out at the hearing that China's retaliatory tariffs on the US are backed by international laws and can be justified, and that the nature of the US' actions is to put domestic laws above international laws.

But Yi also believes that China and the US can solve their dispute through dialogue, on the basis that the US treats China with respect.

He added that although the USTR office said in its email to every attendant that their opinions will be carefully reviewed and considered, he is concerned that all their efforts may have been for nothing and the tariffs will be imposed in the end.

He also believes there is, to some degree, a lack of transparency in the hearing process, as no reasons were given when exempt goods from tariffs were announced at the previous meetings.

"This has baffled the public. And one phrase I heard the most from representatives of US companies [in August] was 'Good luck,' as they have no idea whether the products they wanted to be removed from the tariff list would actually be removed," Yi told the Global Times.

Newspaper headline: I stand for China


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