13 Mazarr Michael J et al Understanding the Emerging Era of International

13 mazarr michael j et al understanding the emerging

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13 Mazarr, Michael J. et al. “Understanding the Emerging Era of International Competition.” Rand Research Report. research_reports/RR2726.html. Introduction The U.S.–China economic relationship has reached a critical juncture. The last year has seen tit-for-tat tariff escalation. So far, $250 billion worth of U.S. imports of Chinese products have been hit with tariffs ranging from 10-25 percent and President Donald Trump is threatening to increase existing tariffs and to place additional tariffs on all imports from China. China has likewise levied tariffs on the equivalent amount of U.S. imports and has threatened to impose more. This trade war has roiled financial markets and contributed to slowing global growth. At the G-20 leaders’ summit in November 2018, Presidents Trump and Xi agreed to resolve the trade dispute within 90 days—by March 1, 2019, though this deadline has recently been extended. The U.S. concerns that have escalated these bilateral tensions stem from specific trade practices endemic to China’s economic model that systematically tilt the playing field in favor of Chinese companies domestically and globally. Progress on specific trade issues will require China to comply with its WTO commitments and to make certain reforms that will likely touch on areas of state control over the economy. In addition, new trade rules are needed to address China’s economic practices not covered by its WTO commitments, including in areas such as SOEs, certain subsidies, and digital trade. These issues also come at a time of increasing concerns over the national security risks China presents, particularly with respect to technology access. All of these matters underscore the complexity of U.S.-China bilateral negotiations as well as the stakes at play. Resolving U.S.-China differences in a meaningful way will take time. This policy brief assesses the state of the U.S.-China trade relationship by looking at the economic impact for the U.S. The policy brief then looks at why the Chinese economic model is so concerning. The brief then explains why, despite the challenges the U.S. has had at the WTO, the WTO should be central to resolving U.S.-China trade tensions. We outline a multipronged strategy, including bilateral, multilateral, unilateral actions as well as working with allies that together would constitute positive next steps for this critical economic relationship. In taking this multifaceted approach, the U.S. should stay true to its values and not be tempted to accept short-term gains or “fig leaf” deals. Creating a managed trade relationship with China would not be a constructive outcome. Instead, the U.S. should work with China to agree on long term
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The US-China economic relationship: A comprehensive approach 7 solutions. The resulting deal should address the real issues at hand in a free market manner and strengthen the multilateral global trading system and rule of law that the U.S. has champi- oned in the post-World War II era.
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