U.S.-CHINA TRADE TENSIONS : Two Sides Will Reopen Talks as Sanctions Loom : Standoff: O.C. firms that sell goods and services in China say they wouldn’t be affected by tariffs or embargo, but importers could suffer.
Barely 48 hours after slapping China with the most massive trade sanctions ever, the White House announced Monday that U.S. and Chinese representatives will resume negotiations next week as they try to back away from a potential trade war.
It’s a war that would affect Orange County, although trade experts say the impact would not be devastating. A number of local companies, including engineering giant Fluor Corp., developer Koll Real Estate Group and computer maker AST Research do business in China.
Paul A. Marshall, vice president of Koll Real Estate, said that companies such as his typically make goods or provide services for sale in China and wouldn’t be affected by trade tariffs or an embargo.
In Washington, as the two nations sought to ease a seemingly intractable dispute over piracy of videos, compact discs and other copyright-protected products, U.S. Trade Representative Mickey Kantor insisted that “piracy of U.S. products is an extremely serious problem” and he continued to insist that those thefts must be curbed in China.
The sudden return to the bargaining table reflected the frequent course of U.S.-Chinese negotiations, indeed of most trade negotiations. It is common for the threat of an approaching deadline to bring the arguing parties back together.
Kantor, President Clinton’s senior trade adviser, was notably upbeat at midday Monday when he announced that--in response to an invitation received Sunday night from his Chinese counterpart--Chinese Trade Minister Wu Yi, the United States would send a negotiating team to Beijing to resume talks next Monday. The negotiations were halted Jan. 28.
“It’s a step in the right direction,” Kantor said of the plan to resume the negotiations. “We’re delighted and impressed by the rapid response from the Chinese government.”
The talks are being conducted under the shadow of stiff economic penalties on both sides if the dispute is not resolved quickly.
Kantor announced Saturday that the United States would impose tariffs, or import taxes, of 100% on $1.08-billion worth of Chinese goods sold in this country, beginning Feb. 26. This would double the price of a wide variety of imported Chinese goods, ranging from picture frames to surfboards. The Chinese immediately said that they would retaliate with 100% duties on such U.S. goods as camera film, cigarettes and cosmetics sold in China.
The Administration’s goal is to force China to crack down on the theft of “intellectual property,” the fruits of creative endeavors, such as the invention of pharmaceuticals, design of computer software and artistic pursuits. Chinese laws prohibit such piracy, but the United States has complained bitterly that they are not enforced.
Chinese factories are purportedly turning out 75 million compact discs, as well as software and other goods without paying fees to artists and other license holders, costing American inventors, musicians, composers, artists and other copyright holders huge sums in missing royalties.
At the same time, the United States is pressing to gain broader access to the Chinese market for U.S. companies, hoping to make it possible to sell licensed U.S. videos, for example, in place of illegally copied tapes.
“If you don’t have market access, if they don’t allow these products to be sold in China and protected, then of course you’ll never be able to address the piracy issue,” Kantor said at a news conference.
While the action announced Saturday by Kantor and the likely retaliation with which the Chinese responded within minutes suggest that the two countries, now at loggerheads, are about to embark on a trade war, it is not unusual for trade disputes to escalate to seemingly intractable points, only to be resolved as a major deadline approaches.
In 1992, the Bush Administration announced that it would impose 200% tariffs on $300-million worth of European goods, including French wines. The tactic had the desired result, and a long-running agricultural dispute was resolved two weeks before the taxes were to take effect.
The immediate readiness of the Chinese to resume negotiations--after refusing to talk all last week as a deadline for announcing the sanctions, on Feb. 4, loomed--gave some hope to Kantor and others on the U.S. negotiating team.
“I don’t know how China could have responded more quickly,” Kantor said. But, he also said: “We expect the Chinese to come to the table prepared to address our concerns over the protection of computer software, chemical and agricultural products, pharmaceuticals, trademarks, audiovisual works, and books and periodicals.”
Import-export broker and foreign trader Martin Kuo, owner of Pacific Champion Service in Buena Park, imports hundreds of tons of consumer goods--mostly clothing and electronics--from China each year. From a purely business standpoint, he says, any kind of trade sanctions are bad.
“But I’m from Taiwan,” he added, “and my knowledge of the mainland is that, if we don’t do this now, then (copyright violations in China) will be a bigger problem in the future.”
Kuo, suggesting that he would be willing to temporarily lose the income from his China operations, said that he believes trade sanctions would teach China to respect copyright laws if negotiations fail.
But real estate developer Marshall says the Chinese are likely to come to an agreement because they are “hungry for our technology and expertise, and we don’t see that hunger going away.”
Robert Wallace, an Irvine-based export marketing specialist, said that he and others in the foreign trade business are hoping for a quick settlement.
“When people get closed-minded, it makes business more difficult,” he said. “Trade barriers and sanctions . . . stop things that are in the planning stages, and sometimes it is hard to get them restarted.’
Times staff writer John O’Dell in Costa Mesa contributed to this report.
