For decades, Chinese policies have posed significant challenges to the tech sector. Laws and regulations have failed to deliver fair treatment, and have limited access to China’s markets for American and other non-Chinese companies.
Over the years, attempts by the United States and other governments and companies to address these concerns have yielded little progress. Yet, thanks to President Trump’s determined efforts to redefine the U.S.-China relationship and fundamentally change Chinese policies and practices, China is finally taking our concerns seriously.
China has a well-established record of shifting the playing field in its own favor. Trump’s decision to stand up to China in a way that no previous president has done bears recognition. Recent reports share encouraging news that China may be more willing to put previous “non-starter” items, such as loosening restrictions on data transfer across borders and licensing rights for non-Chinese companies, on the negotiating table. Trump has a chance to forge an agreement with China that will stimulate real change in its discriminatory policies and practices.
Trump, U.S. Trade Representative Robert Lighthizer, and the administration deserve our appreciation and support on these efforts even if we disagree on tactics, especially the use of tariffs.
As the Office of U.S. Trade Trade Representatives set out in its comprehensive Section 301 report, China has created a tapestry of laws, regulations, standards, and practices in an effort to dominate global innovation in important areas such as 5G wireless broadband and artificial intelligence. Whether it is creating conditions for technology transfer through forced partnerships with Chinese companies; establishing ambiguous and intrusive security review regimes; restricting licensing for foreign cloud services providers; or mandating localization of data in China, these discriminatory practices create an unfair economic advantage for Chinese companies and threaten U.S. leadership.
However, we are no longer in a situation in which China makes technological gains only by stealing others’ technology — China is also innovating on its own. Therefore, efforts to wall the U.S. or other economies off from competition with China will not solve the problem. Rather, we must enter a meaningful trade agreement to allow the U.S. and other countries that play by the rules to stay competitive and have a fair shot at leading the world in technological advancements.
We urge the Trump administration to stay focused on securing a long-term solution that truly and sustainably addresses China’s problematic policies and provides stability and predictability for businesses. For example, in specific areas like cloud computing, the administration should seek to ensure that U.S. cloud service providers are able to own and operate 100% of their entities in China and obtain all licenses necessary to carry out their businesses.
More broadly, the agreement should hold China to commitments to remove trade and investment barriers; cease intrusive security reviews; eliminate discriminatory licensing regimes for non-Chinese companies; refrain from requiring the transfer of technology; take an open and industry-led approach to developing standards; and allow companies to move data freely into and out of the country to do business.
The administration clearly understands that enforcement of China’s commitments is key to success. We encourage it to continue to negotiate a mechanism to make sure China abides by every single commitment that it makes.
However, tariffs are not an effective component of an enforcement mechanism, and they should be removed fully in a final deal. Keeping tariffs in place would only continue to cause pain for American consumers and businesses of all sizes and across all sectors and threaten American economic growth and leadership in innovation.
In fact, a recent estimate by the Tariffs Hurt the Heartland campaign found that Americans paid more than $20 billion in tariffs as a result of the ongoing U.S.-China trade dispute. Achieving enduring change in the Chinese market, and ensuring that China does not “slow roll” its promises until the current U.S. administration leaves office, will only be achievable if the U.S. works with other economies to exert coordinated international pressure.
Like-minded countries must not only press China to live up to its promises, but also share information with the U.S. and other economies regarding China’s adherence to the deal. Trump has invested significant time, energy, and resources in seeking to make a historic and groundbreaking deal. We applaud the president and his administration for their efforts. We urge Trump to strike a strong deal that addresses China’s unfair trade policies in a systemic way, ends tariffs, and recruits other countries to ensure that his legacy with respect to U.S.-China trade relations endures.
Jason Oxman is CEO of the Information Technology Industry Council (ITI).
