Interesting and even daring in some places interview with Stephan Selig, American investment banker and former Under Secretary of Commerce for International Trade (Obama administration). He will talk about Chinese economy, its influence of US economy and trade, and about possible trade war between US and China.
Meanwhile, we’ve been waiting since the top of the hour for Commerce Secretary Wilbur Ross to take the stage at The Heritage Foundation event. He is, apparently, just started. We do have the cameras there.
What we’re going to do, is monitor his remarks and bring you anything that he mentions on trade. This is a White House attempt to soften its tone of the trade dispute. Chinese officials are saying, “We’re not softening anything! It’s impossible to negotiate undercurrent circumstances with the United States.
President Obama’s former Under Secretary of Commerce for International Trade Stephan Selig joins me now, and you have one thing in common with President Trump. He had said, about a week or so ago, “This is not a trade war”. Then, some of his people had said, it’s not a trade war. And most recently, you had said, it’s not a trade war. Is it now a trade war or is he back at blaming the previous administration vs the Chinese?
– Well, Liz, nice to be back.
– Good to help you.
– I would say that, you know, the question belies a certain confusion that we all have. I think the fact that we can’t answer that question clearly is what’s resulting in the market volatility that we are seeing and inability for folks to plan appropriately.
– He called the tariffs that China imposes on US cars coming into China – Stupid Trade. Not Fair Trade, not Free Trade – Stupid Trade. Who negotiated those deals? And is it 25%? The word was that 25% tariff for US cars coming into China, yet when Chinese cars come into the US, we only charge them 2 ½ %.
– That’s right. And a lot of these tariffs were set up many, many years ago. As you know, China joined the World Trade Organization 17 years ago. And we all made a bet – this was, obviously, the previous administration that I was a part of – that China would develop economically and move much more towards the Market Economy over that period a time. And, frankly, that development has been much slower than expected. And I think the current administration has it quite right that we should be putting on pressure on China to make some of those changes. The question is: are we doing it in a smart way that is likely to be effective? And I think the fact that you don’t really know, are we entering into a potentially trade war or not, might suggest that the answer to that is “no”.
– We thought, if there was reciprocity, meaning, President Trump had said, steel and aluminum tariffs that the Chinese came in with $3 billion or no goods. Then, another 50/100 all kinds of threats from the President, as well as $100 billion. Do you get the sense that this will eventually come to pass?
– I don’t. Actually, I think this is more about blaster and positioning, which is why I said last time that I don’t expect a trade war. And the fact is, over the course of last couple of days, since the administration has walked back some of the President’s more aggressive comments, the market’s up 4-ish %. So, I think the market is a little bit more relaxed than that would suggest.
– I personally can’t even call Xi Jinping the Chinese leader. He is now the Emperor. I mean, he just put in his own rules, so he has a clear free runway, till he feels like stopping down. So, he has this long, long tale or ability to look down the road and say, “Why, I can hold out as long as I want”.
– And this is extraordinarily important point in how we negotiate with him, because not only doesn’t he have mid-term elections coming up, not only does he not have a 10-year implications, but he also has control over his media. Which is, obviously, so important. So, as a result of that, his flexibility in how he negotiates with us is dramatically stronger than our administration or our political system would allow.
– I just look and I think to myself, my goodness, of 17 years they’ve been members of the World Trade Organization, and the Chinese are very modern now, and yet they continue to stick back to very Unfair Trade. And nobody’s been able to get them to move on this. Now, they’re talking about devaluing our currency even more, which makes things more unfair, does it not?
– Well, but actually, we have a fair amount of leverage with them. Because, let’s face it, we still are the biggest and most advanced economy in the world. And we had tremendous number of conversations with our Chinese counterparts about having them avoid this so-called “middle income trap”. So, they did a great job of taking their country from a very poor level to middle income levels of roughly $10,000-11,000 per cap-to-GDP. But if they are going to continue to grow their economy and create prosperity for their countrymen, and create jobs for their people, they’re going to have to fundamentally reform their economy. And that’s something that I think we’re all hoping that they do, and they do it fairly and reciprocally.
– Well, it’s interesting to see, one minute it’s the Chinese fault and then, President Trump has said, “I like Xi, we’ll be friends forever, but this is the problem, but it’s not the Chinese fault”. I’ll be so interested to see how this negotiation, let’s call it so, will work. Thank you so much, Stephan.
– Great to be here.
