Latest news with #WendyCutler
The Star
26-05-2025
- Business
- The Star
Truth in the truce: Wendy Cutler mulls if US-China trade can find lasting peace
Wendy Cutler comes from a three-decade career in shaping US trade policy. She worked in the Office of the US Trade Representative from 1988 to 2015 before moving into the think tank space. Today, she is vice-president of the Asia Society Policy Institute. Cutler uses this accumulated experience to offer a view on the fractious US-China trade relationship at a time when trade ties remain tense despite landmark talks between the two powers, followed by a sharp reduction in tariffs, earlier this month. With China and the US agreeing to a truce, what steps do you expect the two sides to take next so they can lock in a tariff-free deal within 90 days? What will top the two sides' agendas, and how likely are they to reach a lasting agreement? The US-China tariff truce, announced earlier this month, exceeded expectations with each side lowering its tariff rates by 115 per cent for a 90-day period. The tariffs were taking a serious toll on both economies and ultimately led both sides to the negotiating table. But 90 days is an extremely short window to find landing zones on outstanding issues of concern. Accordingly, we should expect more ups and downs in bilateral relations in the coming months. It appears that progress is already being made to address US concerns on fentanyl. However, with respect to other matters of concern to the US, like excess capacity, subsidies and transshipments, negotiators will face enormous challenges finding common ground, particularly in a three-month period. We should expect China to put requests on the table, including US hi-technology export controls, port fees for ships, and investment restrictions – all seemingly off limits for US negotiators. I suspect we will see rollovers of the tariff-truce period, as long as progress is being made in the talks. But we should be prepared for bumps in the road, particularly as new trade-related restrictions are announced by each side. Furthermore, US negotiators also need to be vigilant to ensure that the talks are not used by China as a delaying tactic to take needed actions. The US may announce a bunch of trade deals in the coming days after reaching a pact with the UK. Against this backdrop, what is your take on the new global trade regime and the future of the WTO? My understanding is that the administration is making progress in its negotiations with other countries, but challenges remain. The UK was the first country with which a deal was announced. But, upon scrutinising the text, the so-called deal appears to be more of a road map for further detailed negotiations, versus a document that features binding commitments by each side. I'm sure that other countries are closely reviewing the UK text to gain insights about what could work to get the United States to unwind the reciprocal tariffs. It seems to suggest that a 10 per cent reciprocal rate is here to stay, and that partners will be expected to limit or eliminate Chinese content in their supply chains – a big ask for many Asian countries in particular. The US, in many ways, is upending the global trading system and the rules that have governed trade for many years. The US' insistence on retaining a 10 per cent universal tariff flies in the face, for example, of the US-bound tariff commitments under the World Trade Organization (WTO), and the core principle of most-favoured nation is under attack. Regrettably, we're seeing the WTO drifting further into irrelevance. Its current structure does not lend itself to fruitful negotiating outcomes, with any country being able to block progress. And it has been unable to put in place adequate rules to address China's unfair trading practices and an economy based on state support. Without meaningful reforms, the WTO risks becoming more of a discussion forum along the lines of other international institutions, and less of a negotiating body delivering binding trade agreements that address emerging challenges in the world. We've seen President Trump use executive orders to do a number of things, especially with tariffs. Do you think the executive-order process is being used properly, and how is this going to affect US trade policy going forward? During my career, US trade negotiations, initiatives and actions were based in US trade law. There are a number of laws that allow us to take actions against our trading partners, including Section 301, Section 232, our anti-dumping and countervailing duty laws, among others. [Section 301 is part of a 1974 trade act that lets a US president take action, including tariff-based retaliation, to address unfair trade practices and respond to violations by other countries of international trade agreements. Section 232 belongs to a 1962 act and authorises the US secretary of commerce to investigate the impacts of sectoral imports on national security.] This administration is relying on executive orders and the novel use of other statutes, including the IEEPA, as the basis for moving forward. [IEEPA stands for the International Emergency Economic Powers Act, which lets US presidents declare national emergencies to steer foreign trade in response to perceived threats.] The use of the IEEPA is now being challenged in US courts, and we will need to wait to see how they decide. US Congress, however, which has the constitutional authority to regulate commerce, has for the most part given President Trump the green light for his tariff policies. This may change, however, as more constituents feel the price impacts of the tariffs. The executive orders are working in terms of launching the negotiations, but in terms of reaching a trade agreement with any country, for it to be binding and durable, congressional approval would be helpful. Following the news of each shift in the fast-changing US-China trade relationship this year, what tends to be your initial reaction? How do you regard the strategies and tactics being used by both sides? As a long-time US trade negotiator, I quickly learned the lesson that, for agreements to be durable, win-win outcomes are critical. I don't mean that each side necessarily needs to have balanced benefits, but it's important that each side can point to gains to solidify domestic support for the deal, and importantly, to ensure its smooth implementation. Although both the US and China were hesitant for many weeks to contact the other, out of fear of showing weakness, the talks between the two sides occurred earlier than many had expected. I believe it showed that both sides were beginning to feel the impacts of the high tariffs and were concerned that, without a de-escalation, things would only get worse. That said, it's one thing to agree to temporarily lower tariffs, but it's another ballgame to negotiate a meaningful, impactful and durable deal. The Chinese side placed great importance on the establishment of a new consultative mechanism with the United States, while the US delegation barely mentioned this. In light of past US-China initiatives turning into talk shops, it will be important for the US side to ensure that this new forum produces results and does not serve as a delaying mechanism by Beijing to take needed actions. With respect to the negotiations with others, it appears that the US is offering very little besides lowering its reciprocal tariff to 10 per cent. I'm not sure whether our partners will be able to make the major concessions that the US is seeking without addressing at least some of the concerns that they have with the US, too. What's your forecast for the end of the 90-day pause in 'reciprocal' tariffs for most countries? Do you think that each country involved will have a separate deal with the US? Or, if not, will these tariffs actually take effect as they had been proposed on April 2? It will be a mixed bag. I think certain countries, beyond the UK, will successfully conclude deals by the end of the 90 days. Some may not be there quite yet but will be considered to be negotiating in good faith, paving the way for a time extension beyond the 90 days, with tariff suspensions continuing. I also hope that the US finds a way to provide more time for small countries with which our negotiators have not spent adequate time, although the president has suggested otherwise. But even for countries with which we reach deals, I anticipate that if the US determines their implementation to be spotty or weak, it will reimpose tariffs. As a result of the seven ongoing Section 232 investigations, we should expect more sectoral tariffs in the coming months in areas including semiconductors, pharmaceuticals and trucks. As a result, we need to be prepared for tariffs and the ongoing uncertainty that surrounds their imposition. There will be some common elements among all of these deals, but there will also be country-specific commitments, particularly when it comes to non-tariff measures and commercial announcements. What about China's neighbours, such as Japan, South Korea and the Association of Southeast Asian Nations? You had a role in negotiating the Korea-US trade deal, known as Korus, and the original Trans-Pacific Partnership (TPP). The US is out of the TPP, but the Korea pact holds. What lessons should we glean today from the fate of these two deals? The Trump administration is clearly focused on bilateral negotiations. Based on the president's background as a real estate negotiator, he believes one has the most leverage when negotiations are one-on-one. He's not interested in negotiating with a group of countries in a plurilateral or multilateral setting, even though agreements with many at once can often result in a bigger bang for your buck. The TPP is not coming back for the United States. But an important lesson I learned through these negotiations was the importance of achieving a win-win agreement, with both sides being able to point to what they have gained. If countries feel like they've been bullied into an agreement or feel that their concerns were ignored, that often results in substandard implementation. [The TPP has been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It was spearheaded by the United States under the Obama administration, but Trump pulled out in 2017. It was eventually signed in March 2018 by 11 countries covering a market of about half a billion people and 13.5 per cent of the global economy.] I think back to many of the US' one-sided deals with Japan in the 1980s and 1990s, focused on a range of sectors, including autos, telecommunications and insurance. We often pursued these agreements with the objective of solving our market-access concerns, only to find another layer of problems once the onion was peeled back. The Japanese were highly skilled in finding other ways to restrict our exports, disavowing their commitments to implement our deals in practice. But their attitude towards trade negotiations changed dramatically with the TPP, where Tokyo could see clear benefits from joining this agreement. Importantly, they were stellar in implementing both the letter and spirit of the CPTPP. The USTR traditionally leads US trade talks with China and other trading partners. The spotlight on May 10-11 was on Trump and US Treasury Secretary Scott Bessent. Do you think the USTR holds the same role now as in the past? I don't think that is the case. The USTR, under the leadership of Jamieson Greer, has been actively engaged in talks with countries, including China. In particular, the USTR is leading the work on market access and the economic-security component of these talks. My sense is that, while there may be a perception that USTR Greer is relatively junior compared with [US Commerce Secretary Howard] Lutnick and Bessent, Greer's star is going to rise as these negotiations continue, in light of his expertise and negotiating experience. With respect to the China talks, Greer was right by Bessent's side. His experience working on the phase-one talks [during Trump's first presidency prior to a phase-one deal signing in 2020] will be invaluable as we enter into new negotiations with China. So, I think it's going to be a partnership. And again, I think you'll see the USTR role and input and influence increase over time, as we embark on negotiations with China and also during our negotiations with all of these other countries during the 90-day period. Do traders have any workarounds – for example, the list of exemptions – to high tariffs if they resume? Do you think the end of de minimis would put significant pressure on US customs in terms of efficiency, given that levying these small parcels requires a lot of time and effort? It's common practice that, once rules are set, companies look for workarounds. This couldn't be clearer than with respect to the de minimis rule, where certain firms skilfully broke up their shipments to utilise the tariff-free benefit. Frankly, I'm surprised that it took Washington so long to re-evaluate the de minimis exception, in light of the success of Chinese companies, in particular, in exploiting this loophole. US customs officials are going to be extremely busy in this new trading world, because not only do they have to deal with the de minimis exception being removed for China, but the exception is still in place for other countries. Before 'Liberation Day', for example, for the most part, many countries shared the identical most-favoured-nation tariff, which made it easier for our customs officials to assess duties at the border. But now, we're going to have much more complicated rules, where there are going to be product exclusions that are applied to different countries, plus different country tariff rates, and all this is subject to change in the Trump world. If you add the further sectoral tariffs being implemented soon as well, it's going to be a very complex tariff world policy with implementation challenges. To what extent can China accelerate economic self-reliance and trade ties with other countries to offset a possible loss of the US market? Does China have the capacity or the resources to use its domestic market, plus other countries, to replace what it does with the US in terms of trade? China is much more prepared this time around for a trade war than during Trump 1.0, when it was caught flat-footed. Beijing has developed an expanded arsenal of tools that go beyond tariffs, to respond to the US' actions. China has also worked hard to diversify its trading partners. For example, it now imports more soybeans from Brazil than from the United States. China has also undertaken efforts to bolster its self-sufficiency, and that comes out clearly in the data. They are less dependent on US imports and the US market than during Trump 1.0. To a point, that has lessened the blow of US tariffs against China. However, I don't want to discount that the new US tariffs are having an enormous impact on China – on its economy and export machine, in particular. Also, through our negotiations with third countries, we're seeking rules to limit Chinese content in third-country exports and investment restrictions on Chinese companies. One interesting development is that the latest Chinese trade statistics show a decrease of 21 per cent in China's exports to the US, but almost a similar increase in its exports to Asean – the 10 Southeast Asian countries. But now that some of the high tariffs have been suspended for 90 days, I expect that we will see a new surge in Chinese imports in the coming weeks. I don't think this is sustainable, because third countries, like those in Southeast Asia, are under increased pressure, not just from the United States, but also from their domestic constituencies, to restrict Chinese imports. This is because the surge of Chinese imports is displacing their workers and leading to job losses and company closures. The significant impact on the Chinese export machine from this will hopefully lead the Chinese leadership to put more emphasis on increasing domestic demand and domestic consumption. Obviously, Beijing is talking about trying to address this concern, but it is reluctant to do so, preferring to give support to producers. Will tariffs and other trade barriers bring back manufacturing and jobs to the US? What kind of manufacturing might return, and at what cost? Bringing back investment to the United States is one of the president's key objectives in his tariff policy. However, it's not the sole objective. In his view, tariffs are effective tools to attract investment, because tariffs are not applied within US borders. But the White House is forgetting or choosing to ignore an important point: many US companies that are manufacturing in the United States rely on imports of inputs, machinery and materials, so high tariffs raise their costs and make potential investments questionable. We are also hearing from both US and foreign companies that there's a limit to how much they can invest in the United States. Additionally, they are concerned about the speed at which the US can accommodate such investments, given all of the regulatory hoops that companies need to go through. There are also concerns about securing the needed workers to even build the plants, not just work in them. That said, certain companies have made important announcements to reshore investments in the United States. For many years, our global trading system was based on economic activity occurring in those places where profits and efficiency could be maximised. But that is changing, as more and more companies have recognised that they also need to take resiliency into consideration. It is increasingly dangerous to be overdependent on one source for needed inputs. We have seen more and more companies building up resiliency and pursuing the China-plus-one strategy to have alternative suppliers. But all of that also adds to their bottom line. We have seen some high-profile investment announcements being made in the White House, from autos to technologies. I think we're going to see more of those investments in the US, but probably not in low-cost manufacturing. Those low-cost manufacturers would need further incentives beyond tariffs to relocate to the United States. Companies will also be looking for workarounds to avoid paying high tariffs. This could involve seeking exemptions for their products, shifting their supply chains to low-tariff countries, and front-loading shipments during tariff-pause periods. More from South China Morning Post: For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
South China Morning Post
25-05-2025
- Business
- South China Morning Post
Truth in the truce: Wendy Cutler mulls if US-China trade can find lasting peace
Wendy Cutler comes from a three-decade career in shaping US trade policy. She worked in the Office of the US Trade Representative from 1988 to 2015 before moving into the think tank space. Today, she is vice-president of the Asia Society Policy Institute. Advertisement Cutler uses this accumulated experience to offer a view on the fractious US-China trade relationship at a time when trade ties remain tense despite landmark talks between the two powers, followed by a sharp reduction in tariffs, earlier this month. This interview first appeared in SCMP Plus. For other interviews in the Open Questions series, click here With China and the US agreeing to a truce, what steps do you expect the two sides to take next so they can lock in a tariff-free deal within 90 days? What will top the two sides' agendas, and how likely are they to reach a lasting agreement? The US-China tariff truce, announced earlier this month, exceeded expectations with each side lowering its tariff rates by 115 per cent for a 90-day period. The tariffs were taking a serious toll on both economies and ultimately led both sides to the negotiating table. But 90 days is an extremely short window to find landing zones on outstanding issues of concern. Advertisement Accordingly, we should expect more ups and downs in bilateral relations in the coming months. It appears that progress is already being made to address US concerns on fentanyl. However, with respect to other matters of concern to the US, like excess capacity, subsidies and transshipments, negotiators will face enormous challenges finding common ground, particularly in a three-month period.
Yomiuri Shimbun
17-05-2025
- Business
- Yomiuri Shimbun
Former U.S. Deputy Trade Representative Cutler: U.S. Should Be a Reliable Partner to Other Countries
Former Acting Deputy U.S. Trade Representative Wendy Cutler WASHINGTON — Former Acting Deputy U.S. Trade Representative Wendy Cutler said in an interview with The Yomiuri Shimbun that countries may shun the United States and intensify work among themselves if they cannot regard the U.S. as a trusted and reliable partner. The following excerpts from the interview have been edited for flow and clarity, with input from Cutler herself. This interview was conducted by Yomiuri Shimbun Staff Writers Yuko Mukai and William Corcoran. *** The Yomiuri Shimbun: How do you see U.S. President Donald Trump's tariff policies impacting the U.S. economy and also the world economy? Wendy Cutler: Clearly the U.S. tariff policies are impacting the U.S. economy. We're already beginning to see some price hikes. People are forecasting we're going to be shortly seeing shortages in supermarkets and on the shelves in retail stores. We've seen volatile impacts on our stock market and our bond market. U.S. businesses are delaying investment decisions until they have a clearer picture of how things will play out. These tariffs are impacting our economy at all different levels and at all different angles. Yomiuri: Japan and the United States have started negotiations. What is the biggest challenge from the Japanese perspective in negotiations with the United States? Cutler: I understand that negotiators from Japan and the U.S. are making progress, but there are still some serious outstanding issues, which are raising concerns in Tokyo. Probably, the most important concern is whether the U.S. will move off any of its sectoral tariffs, particularly in the automotive sector. Japan will be hard pressed to conclude a trade deal with the United States that does not address its automotive concerns, particularly given that the recent U.S.-U.K. deal includes tariff relief for this sector. Yomiuri: The Trump administration appears to be fixated on the trade deficit. How do you think that plays into the negotiations? Cutler: It definitely plays into the negotiations because, not only does Japan have a large trade surplus with the United States, its trade surplus is also in products like autos, auto parts, machinery and other manufactured goods that are the priority sectors for President Trump. That said, Japan is a close ally and has been a strong partner on our economic security agenda. Its companies have made extensive investments in the United States, and further investments are in train. It has strengths in the shipbuilding sector, in which the U.S. is looking to rebuild. I would hope that all of these factors will be taken into account as the administration negotiates with Tokyo. Yomiuri: When you look at the Trump administration's tariff and other economic policies, do you see that how they are trying to create a united front against China? Do you see their purpose for doing this? Cutler: There is an economic security pillar in the trade negotiations underway. The recently announced U.S.-U.K. deal suggests that stricter rules of origin, strengthened transshipment measures and bolstered investment screening measures are important objectives for Washington in these talks. But what I find surprising is that if China is really the big challenge of this century, then the policy of hitting our allies and partners with tariffs at the same time we're asking for their cooperation on China-related matters makes little sense. My concern is that if our partners feel like they were pressured into concluding trade deals that run counter to their interests, they will be less enthusiastic about working with the United States on matters surrounding China. Yomiuri: How do you see Trump's economic policies in light of U.S.-China competition? Cutler: I think the White House has been pretty clear that it doesn't place a lot of importance on our World Trade Organization obligations and is willing to ignore them, if necessary. In the meantime, China is using this opening to portray itself as the champion of free trade and the rules-based international order. I am concerned that, if the U.S. is viewed as stepping back from the rules-based international economic order, it will lead other countries to double down and work among themselves to maintain and strengthen that order without the United States. This trend will ultimately disadvantage the U.S. for years to come. Yomiuri: How can a country like Japan receive assurances that Trump won't break his deal in a year or so when he's upset with it? Cutler: President Trump looks at tariffs as the tool to solve a wide array of concerns, not only in the trade space. If he doesn't like a country's migration policies, or he thinks a country may not be spending enough on its own defense, he has shown he is willing to consider tariff hikes. Many countries negotiating trade deals with the U.S. are very concerned that, even if they achieve some certainty now through a trade deal, they won't necessarily be shielded from tariffs in the future. I expect countries to push for more certainty regarding the prospects of future tariff hikes in the ongoing negotiations. Wendy Cutler Cutler served at the Office of the U.S. Trade Representative for nearly three decades, working on a range of trade negotiations including ones involving Japan, South Korea and China. During the presidency of Barack Obama, Cutler was involved in negotiations regarding the Trans-Pacific Partnership agreement. She is currently vice president at the Asia Society Policy Institute and received the Order of the Rising Sun, Gold and Silver Star in 2022.
South China Morning Post
15-05-2025
- Business
- South China Morning Post
US lawmakers mull State Department shake-up as trade partners seek new alliances
Major economies are beginning to work around the United States as Washington breaks away from the global trading rules that it established, witnesses told lawmakers on Wednesday, in a hearing called to assess how to restructure the US government to align economic and foreign policy goals. Witnesses and lawmakers in the hearing organised by the House East Asia and Pacific subcommittee – chaired by Young Kim, a California Republican – generally agreed that a policy of closer economic engagement with trading partners was necessary, particularly to counter China's growing influence, but needed closer coordination between numerous US government agencies. 00:45 Trump says he can see himself dealing directly with Xi on US-China trade deal details Trump says he can see himself dealing directly with Xi on US-China trade deal details Kim said her committee aimed to craft legislation to address concerns expressed by US President Donald Trump and some of his predecessors that 'economic security, economic policy is foreign policy'. She argued that 'the current alignment of functions and agencies charged with leading our economic statecraft effort is in need of structural reform'. Against the backdrop of Trump's bewildering series of tariff impositions, rescissions, and threats, witnesses including Wendy Cutler – a former US trade negotiator and now vice-president at the Asia Society Policy Institute – warned that economic partnerships that would have been 'impossible just years ago' are moving ahead.
Yahoo
12-05-2025
- Business
- Yahoo
Ex-Trade Diplomat Wendy Cutler Reacts to Tariff Truce
Wendy Cutler, Asia Society Policy Institute Vice President and Former Acting Deputy US Trade Representative, reacts to easing tensions between the US and China after the two countries agreed to temporarily reduce tariffs on each other's goods. She speaks with Katie Greifeld and Matt Miller on Bloomberg Open Interest. Sign in to access your portfolio
