Wilbur Ross on China Trade Talks: Enforcement, Export Controls, and Phase One

China Trade Talks and Domestic Pressures

• ⚠️ Wilbur Ross acknowledges rumors of unrest in China, including rising youth unemployment and unpaid wages, which could put pressure on Xi Jinping.
• 🧠 Despite these pressures, Ross is skeptical that Xi Jinping is in any danger of losing control due to his established power base.

Export Controls and Concessions

• 💡 The US reportedly wants to loosen export controls on items like jet engines, chip-producing software, and ethane, which concern Ross.
• 🔑 Ross emphasizes the importance of rare earths for US industries and defense, noting that China's export controls on them are a critical issue.
• ❓ He questions what the US would receive in return for relaxing its own export restrictions, stressing the need for a quid pro quo.

Enforcement and Phase One

• 🎯 Ross highlights the critical need for an enforcement mechanism and penalty system in any new trade agreement, citing China's past failure to adhere to agreements like Phase One.
• 🚫 He points out that China's new negotiator is not a free market reformer and seems unwilling to address Phase One issues, which included safeguards for intellectual property and no forced technology transfer.
• 🤝 The former commerce secretary advocates for a "trust but verify" approach with monitoring and policing mechanisms.

Trade Strategy and Transshipment

• ⚖️ Ross suggests a strategy of making deals with other key players to isolate China before negotiating with them, which would strengthen the US position.
• 🚢 He also discusses the issue of transshipment, where Chinese goods are relabeled as Vietnamese, and proposes that Vietnam should impose similar tariffs on Chinese goods to eliminate this practice.
• 🤔 Ross expresses concern that the current talks might be too hurried and not well-thought-out, especially with other deals being negotiated simultaneously and an approaching deadline for the trade pause.