American Business Community’s Priorities for Fair US-China Commercial Relations

The US-China Business Council (USCBC) supports the Trump administration’s efforts to craft a trade policy agenda that promotes investment, enhances America’s technological advantages, and safeguards economic and national security for the benefit of American businesses, workers, farmers, and the overall economy. To help deliver on those objectives, USCBC is pleased to provide the administration a set of priorities and recommendations for managing commercial relations with China.

Our member companies, which include America’s most iconic brands, consider their business activities in China to be crucial for their overall success and global competitiveness. Their ability to participate in the China market generates direct benefits to the American economy through increased exports, jobs, and profits that are reinvested in research and development, which in turn bolsters America’s competitiveness worldwide.

In recent years, policy decisions from both governments have made it more challenging for American companies to conduct business in China. In China, policymakers have strengthened industrial policies to benefit Chinese companies and unfairly discriminate against American companies, workers, and farmers. In the United States, overly broad and poorly crafted export controls and other regulations have weakened American competitiveness globally and, in some cases, undermined US national security.

The transition in administration and Congress is an important opportunity to reevaluate and advance strategic priorities for the US-China commercial relationship. As the Trump administration crafts its China strategy, USCBC will support its efforts to hold China accountable for fulfilling its “phase one” commitments and pressure China to make long overdue changes to its economic, investment, and trade policies that disadvantage American firms, workers, and farmers. Bringing about change on these structural policy issues will require focused and deliberate negotiations with Chinese policymakers.

We also urge the administration to assess the policies imposed during the final days of the previous administration and make appropriate modifications that will support, rather than harm, US innovation, competitiveness, and national security. Doing so will help make America safer, stronger, and more prosperous.

Summary of key recommendations:

• Promote fair treatment of US companies, products, and services through comprehensive commercial negotiations with China: USCBC urges the administration to reengage Chinese policymakers to address industry’s top challenges, expand opportunities for US firms in China, and promote fair treatment for American companies in China. Reaching and fully implementing an agreement will benefit both countries and support a more fair and durable bilateral commercial relationship.
• Balance near-term deliverables with structural policy changes: American companies continue to face trade and market access barriers in China despite China committing to removing many barriers under the US-China phase one agreement. In negotiations with Chinese policymakers, the Trump administration should hold China accountable to its phase one commitments and seek to unlock commercial opportunities for US companies. A commitment to near-term deliverables would serve as a confidence-building measure and a base for negotiations on structural policy issues, including policies related to domestic substitution, government and state-owned enterprise procurement, intellectual property protection, and more.
• Do not statutorily modify China’s permanent normal trade relations (PNTR) status: Partially by virtue of the substantial tariffs placed on imports from China under Section 301, the United States has already de facto revoked China’s PNTR status. Under the status quo, the president maintains broad discretion and negotiating leverage to accomplish a range of policy objectives. Statutorily revoking PNTR would only weaken the president’s hand. It would also have severe economic consequences for US businesses, agriculture, and consumers, including higher costs, inflation, and job losses, especially under proposals that would substantially raise tariffs on non-strategic goods.
• Reduce existing and limit new tariffs to target US national security goals and unfair Chinese practices and expand the exclusion process: The administration should strategically focus the application of Section 301 or other tariffs to address legitimate issues with China’s unfair economic practices, protect specific US national security concerns, and mitigate the inflationary effects on US businesses, consumers, and farmers.
• Rescope national security restrictions on business: To be effective, export controls, sanctions, data security, and investment screening policies must be designed in a manner that is focused, clear, consistent, undertaken with likeminded countries, and coordinated between different US government agencies with clear compliance requirements and time frames, including grace periods. We urge the administration to assess the policies imposed during the final days of the previous administration and make modifications to support, rather than hinder, US innovation, competitiveness and national security. Many such rules were rushed through without public notice and comment, resulting in scores of errors and compliance issues.
• Strengthen bilateral mechanisms for commercial deals: To enable the United States and China to coordinate on policy challenges and ensure US companies are treated fairly, the administration should strengthen existing bilateral working groups. Such groups should be solution oriented, with meaningful industry engagement and a focus on tangible improvements in both policy and enforcement from regulatory stakeholders in China.
• Promote people-to-people exchanges: Increasing two-way travel between the United States and China is fundamental to boosting American investment, trade, and jobs. The administration should work with the Chinese government to ease travel restrictions and increase the number of direct flights between the two countries. Both countries should ease work requirements for expatriates, including by lowering employment restrictions in China and removing caps on H-1B visas.