Washington’s China Trade Dilemma

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Trade-dependent Washington state is in a tight spot as the U.S.-China trade war escalates.

Voters should start thinking now about what course they’d like to see the White House take if the trade war continues beyond 2020.

While just 37% of Washingtonians voted for President Donald Trump in 2016, the majority are now depending on him to successfully address China’s ongoing theft of intellectual-property and unfair trade practices harming the state’s economy.

Whether Trump’s unpredictability, bombast and use of tariffs as a bludgeon result in a good outcome remains to be seen. Patience with his tactics will wear thinner if there’s no progress this year and the U.S. enters a recession. Then the risk is that Trump caves, letting China off the hook and giving Wall Street a bump ahead of the election.

Both parties share some blame. The Democrats’ 2016 presidential candidate joined Trump in turning against the Trans-Pacific Partnership negotiated by President Obama. That multilateral trade agreement could have prevented this dispute. It would have imposed fair-trade rules around the Pacific Rim. That bloc would pressure China to comply without resorting to blunt and painful tariffs.

The current tit for tat reached new heights last week when China announced it was halting purchases of all U.S. agricultural products. That’s a blow to Midwest commodity producers in particular, although they’ve faced plunging China exports since the dispute escalated last year.

Farmers nationally and in Washington appear to be taking the long-term view, believing it’s ultimately worthwhile to address China’s unfair practices and reach agreement with their largest potential market.

National farmer sentiment rose last month, with 78% believing that the trade war will ultimately be resolved in a way that benefits U.S. agriculture, according to Purdue University’s Ag Economy Barometer.

China’s virtual moratorium is “clearly a concern,” but new dairy orders to China had already dried up after tariffs imposed last summer, according to Stan Ryan, chief executive of Seattle-based Darigold, which represents 430 Northwest dairies.

Ryan said the big issue for Darigold isn’t the current loss of China sales but the longer-term potential China presents. In the industry, he sees “a pretty strong belief” that the U.S. needs to engage on unfair trading issues, including forced transfers of intellectual-property and technology theft.

“It’s an appropriate and proper trade issue to escalate and try to resolve,” he said, adding that the U.S. simultaneously needs to finalize its trade agreement with Mexico and Canada, reach an agreement with Japan and catch up to the European Union’s progress on trade deals.

For context, China’s theft of American intellectual-property costs about $225 billion to $600 billion annually, according to a 2017 report by the U.S. Trade Representative.

China remains America’s largest trading partner, exporting $539 billion worth of goods to the U.S. last year and importing $120 billion, including $9.3 billion worth of agricultural products. Airplanes were the largest category of goods imported, at $18 billion. China also imported $59 billion worth of services, including software and travel.

Washington farmers are generally persevering. Fruit growers sold cherries in China this year despite a higher tariff. Only about 3% of 2018’s apple crop went to China, with Mexico, Canada and India the leading markets, said Mark Powers, president of the Northwest Horticultural Council in Yakima. Growers’ primary concern now is finding enough laborers, he said.

Wheat growers also have options. China’s moratorium is “bad for the overall grain complex but not as bad for wheat,” according to state Sen. Mark Schoesler, a Ritzville wheat farmer. He said Japan, Taiwan, Korea and the Philippines are more steady and predictable buyers,

“I’d like to see it resolved — every American has a need for a better trade deal with China,” Schoesler said.

A Republican leader, Schoesler is clearly partisan. But his take on the China dispute should resonate across party lines.

“Somebody had to take a stand at some point against what are obvious bad trade practices,” he said. “We all know they do bad stuff, but nobody would ever do anything about it.”

Still undetermined is whether Trump has the right strategy, tactics and execution.

Republicans must be ready to seek change if Trump fails, and Democrats must be ready with an equal or better strategy to address China’s unfair practices and improve trade relations.

Correction: This editorial was corrected Aug. 10 to reflect the correct level of Chinese exports to the United States last year — $539 billion.

Posted By: Seattle Times  
Posted On: Aug. 9, 2019 – Corrected Aug. 10, 2019