Rep. Larsen, US-China Working Group Co-Chair, Believes Trade Agreement With China Unlikely

Rep. Rick Larsen, D-Wash., said he is skeptical that a formal agreement on trade will be reached in the U.S.-China talks, citing what he called the Trump administration’s lack of “patience,” and that while some features of the renegotiated NAFTA remain in contention, he senses that more in Congress are comfortable with the language.

Speaking on a podcast with The Brookings Institution about trade priorities in the new Congress on Feb. 4, Larsen, who co-chairs the House of Representatives’ bipartisan U.S.-China Working Group, said that he doesn’t think the U.S. and China will necessarily come to an agreement -- something he said is a common misconception. “What we end up with won’t be a trade agreement -- it will be a cessation of hostilities,” Larsen said. “I don't see where there's going to be an actual trade agreement that is a document that outlines fundamental changes.”

Larsen said a likely outcome may be that the two sides agree to continued, temporary trade for lowered tariffs. He added that he isn’t sure whether the talks will address what he said are the U.S.’s main trading issues with China, including the Chinese state-owned-enterprise involvement in its economy and its lack of market access for foreign investors. “The most I see right now is the classic, ‘you buy more of our stuff and we’ll drop tariffs,’” Larsen said. “It’s getting back to square one and calling it a victory, which is frankly not a victory at all.”

Larsen was also critical of the Trump administration's approach to Chinese trade talks. The U.S. has threatened to increase tariffs from 10 percent to 25 percent on $200 billion in Chinese goods if a trade agreement is not reached by March 2. “It’s not all on us. The Chinese have not been easy negotiators,” Larsen said. “But any trade agreement takes time, it takes patience, it takes playing some long game. And this administration does not seem to be the one to practice that patience.”

Larsen did say, however, that much of Congress has grown comfortable with the renegotiated NAFTA, called the U.S.-Mexico-Canada Agreement or USMCA, although several facets of the deal will still be contested. Larsen pointed to specific issues such as rules of origin for car makers and the enforceability of labor and environmental provisions. “I think largely most of the agreement, as we've seen it here in Congress, is that there's a lot of comfort with it,” Larsen said.

Larsen also spoke briefly about President Donald Trump's decision in 2017 to pull out of the Trans-Pacific Partnership -- a trade agreement between the U.S. and 11 Pacific Rim nations -- which he said was a mistake. While Larsen said he doesn't see the Trump administration rejoining the TPP, he said the U.S. could rejoin in 2020 if Trump is not re-elected. "We made a mistake in pulling out in the first place," Larsen said. "We need to correct that in the future."