Larry Kudlow on implications of a trade truce with China

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White House economic adviser Larry Kudlow talks about the implications of a trade truce with China in an interview with Chris Wallace of Fox News on Sunday.

Reporter: What have the U.S and China committed to as they resumed these talks? Is there a deadline for how long these talks will go on?

Kudlow: Well first place, just resuming the talks as President said continuing the talks which have been interrupted for a while is very big deal. I think that was the banner headline from this; I think we might be pleased at that, no promises, no deal made, there’s no timetable I want to emphasize that. President said several times this is about the quality of this deal. There is no timetable; there is no rush. He’s comfortable whereas in any case.

But if they are going back, we will resume the talks. The two teams will begin getting together. Tariffs will not be raised. There will be no lifting of tariffs on the remaining 325 billion dollars. That’s an important concession by President Trump. And while the talks are going, we also expect the Chinese to begin large scale purchases, imports of U.S agricultural products and services.

So no talks, resume talks. No new tariffs, and agricultural purchases and the rest will go on for quite some time frankly.

Reporter: You say quite some time. Are we talking for months? Or are we talking for years? And I also want to ask you, you had said the two nations were 90 percent of the way with the deal before the talks broke down. Have they agreed to keep the commitments they already made or are we starting from scratch?

Kudlow: President mentioned a couple of times in his press conference and elsewhere that he would like to go back to where we left off in early May, to where we were . Yes, that 90 percent number is fair although the last 10 percent could be the toughest and there is no guarantees the deal would go through.

Look, it is very important I know from the American side, the relationship with China has to be re-balanced; it has been very un-balanced in recent years. As you know, we have tremendous problems with the intellectual property theft, forced transfers of technology, tariff or non-tariff barriers. There’s been cyber hacking going on, and other issues. Those have to be remedied.

They are very important points of these talks. However long that may take, it is impossible to predict. We prefer to go back. I don’t know what the Chinese side is going to say. We won’t know until ambassador Lighthizer and secretary Munuchin so forth get back together with the Chinese counterparts.

Reporter: Ok, one thing that we do know is that the big US concession is that President Trump has agreed to lift his ban and to allow US companies to sell some products to the Chinese Telecom giant Huawei. Here is what President Trump said about Huawei last month:

(Trump remarks: Huawei is something that is very dangerous. You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous.)

Question: why the president is willing to do business again with a company that he said is an extension of Chinese intelligence and a lot of people say if Huawei products go into other countries, we allow the Chinese to spy on people using their products?

Kudlow: Well, that very well may be. We would be quite careful here. The president’s announcement at this meeting in Osaka- he was very clear to say that American companies can supply Huawei with various products and services, provided there was no national security issues or problems. So the Commerce Department has as you may know already offered a number of general service licenses for some sellouts to Huawei. On the other hand, I think, Commerce would probably go back after the president’s decision and take another look at that. Maybe open it up, there are a lot of technology services, telecommunication services you can find in general markets and we don’t think have any national security implications. So I think there is a good chance the Commerce Department Secretary Willbur Ross will open the door and grant new licenses.

Reporter: Let me interrupt. There are a number of Senate Republicans who are concerned about that idea of opening the door and to some degree lifting the ban. I want to take a look at what some of them have said.

(Texas Senator Ted Cruz: Huawei is a Communist Party controlled surveillance agent. They own this telecommunications company. )

(Nebraska Senator Ben Sasse: So if our allies decide to trust Huawei, they have decided to trust the Chinese government with the big data.)

And Republican senator Marco Rubio tweets after the president’s announcement this weekend, “If President Trump has agreed to reverse recent sanctions against Huawei, he has made a catastrophic mistake. It will destroy the credibility of his administration’s warnings about the threat posed by the company; no one will ever again take them seriously.

The Senator Rubio said the Senate will put in place all of the sanctions to fight with the President. What do you think?

Kudlow: Well I appreciate their national security concerns. And President shares the point of view. This is not a general amnesty. Huawei will remain on the so-called “entity list” with their serious export controls. And in any national security influences or suggestions, there won’t be any licenses.

But having said that, I think all that is going to happen the Commerce Department will grant some temporary additional licenses with its general availability. For example, some of the chips makers in the United States are selling products that are widely available from other countries. And we don’t think there is any national security.

So we will all look at this carefully. We will undoubtedly, the president will be meeting with senators and others to (look at) at our own trade principles. We are going to look at this too.

So this is not a general amnesty. They will remain on the so-called entity list and the national security concern will remain paramount.

Notes taken and Edited by staff

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