U.S. Trade Representative Ron Kirk has issued a stern warning to China: While he strongly favors negotiated settlement of disagreements with Washington's second-biggest trading partner, he is prepared to use litigation if talking doesn't work. The message, delivered on June 2 in a speech in Washington, contrasted with Treasury Secretary Timothy Geithner's meticulously diplomatic remarks in Beijing this week.
Kirk, a congenial former Dallas mayor who smiles frequently and carefully addresses everyone by name, is leading the Obama Administration's attempt to boost trade as one part of reviving the U.S. economy. But he is doing so at a time of considerable suspicion in business and Congress about allegedly unfair trade policies abroad. Last month, Kirk was left issuing a call to the adversaries on trade in Washington to stop "name-calling" each other "as either protectionists or anti-worker."
But in his June 2 speech before the U.S.-China Business Council, Kirk underscored his challenge in gaining congressional passage of three George W. Bush-era bilateral trade deals, and at the same time resuscitating a fresh global trade accord known as the Doha Round. Before fresh trade deals, Kirk said, he must demonstrate to Americans that the Administration is prepared to hold U.S. trading partners' "feet to the fire" to resolve disagreements.
Resorting to the WTO
It was perhaps to that end that Kirk peppered his talk with examples of what he might do in the pursuit of fair trade, including "enforcement," "enforcing," and "strong enforcement" of U.S. rights, not to mention "litigation" and "dispute settlement." "If we have to file at the [World Trade Organization], we'll file," Kirk underscored, in case the message was not yet clear.
Dennis Wilder, who served on the National Security Council during the Bush Administration and is now a fellow at the Brookings Institution, said that Geithner was hammered by some commentators for alleged softness on Beijing during his two-day visit this week. In January, Geithner prompted concern in Beijing when he accused it of manipulating its currency—his office later said the remark was mistakenly included in a written statement to Congress—and on his China trip he seemed to take great care to make clear that he wants a cooperative relationship with Beijing.
"I would guess that Ron Kirk is attempting to correct the impression that the U.S.—in order to keep China investing in U.S. Treasuries—will not call China up short when there are cases requiring the U.S. to see remedial steps in the WTO," Wilder said in an e-mail. "The Obama Administration is having to walk a fine line on China—they need to keep China friendly but they cannot be seen as failing to defend the interests of U.S. business and the U.S. consumer."
Kirk's office said the Administration generally prefers negotiation, and simply means to note that litigation is one instrument in Kirk's official "toolbox." Debbie Mesloh, a Kirk spokeswoman, said the June 2 remarks were similar to those he made previously, for instance a May 18 speech before the U.S. Chamber of Commerce. In that speech, Kirk briefly mentioned enforcement twice, while stressing a call to the various sides on trade in Washington to stop bickering. "It's time to lay down our arms, come out of our bunkers, and start supporting important initiatives on their merits, not reject them for tradition's sake," Kirk said in the U.S. Chamber speech.
Jeremie Waterman, senior director of the China program at the U.S. Chamber of Commerce, said the June 2 speech was "balanced." "The focus is first on trade diplomacy," he said. John Frisbie, president of the U.S.-China Business Council, which is made up primarily of companies that do business in China, said that Kirk's June 2 speech was well received by his membership. Geithner was also scheduled to meet on June 3 with the U.S.-China Business Council in a closed-door session about his trip to China. "When good-faith dialogue fails, you have to look at your other tools," Frisbie said. He said that the U.S.-China trade relationship has improved, including greater market access for services and protection for intellectual property, but that "there is more to be done."
LeVine is a correspondent in BusinessWeek's Washington bureau.