Airtalk With Larry Mantel, KPCC Radio, Los Angeles (NPR)

Interview
Daniel R. Russel
Assistant Secretary, Bureau of East Asian and Pacific Affairs
Los Angeles, CA
April 22, 2016


MR. MANTEL:  Good morning, it's AirTalk with Larry Mantel.  Great to have you with us wherever you are in Southern California.  Sure hope you have a great weekend lined up.

As you well know, trade has been a significant issue during this year's presidential elections with two candidates, both Bernie Sanders and Donald Trump, who have been hitting hard what they see as the negatives of trade for U.S. workers.  They say despite economists jumping on the trade bandwagon that millions of American workers have lost their jobs as a result of U.S. trade policies and trade agreements.

Joining us to talk about that issue, as well as others involved in U.S.-Asian relations, Daniel Russel, who is U.S. Assistant Secretary of State for East Asian and Pacific Affairs.  That's the longer way of saying he's the top State Department diplomat for Asia.

Mr. Russel, thank you for being with us; appreciate it very much.

SECRETARY RUSSEL:  Thank you, Larry, I'm glad to be here.  And please call me by my code name, Danny.

MR. MANTEL:  Danny, okay.  Danny, let's start, first of all, with the whole tone of how trade has been talked about in this presidential election.  As someone who travels regularly to areas where we have these trade partnerships, how is that perceived abroad?

SECRETARY RUSSEL:  Well, Larry, I think there are two different pieces to it, at least as I think about it.  One is the spectacle of American elections, which has a tremendous impact on the countries in the Asia-Pacific region, and they follow it always very carefully, sometimes without being able to perhaps understand the nuances and the traditions of what candidates say before, and what an actual president-elect would do after an election.

The other piece to it, though, is, as you said, trade.  And in my case I was assigned to work at the White House at the beginning of President Obama's tenure when the U.S. was recovering -- the world was recovering -- from, really, a horrible economic crisis; and that was, I think, a major motivator behind the decision to really invest hard in the Pacific region.

We're a Pacific country -- I don't have to tell you, we're here in LA. -- and we have a huge interest in tethering ourselves to the most dynamic, youthful, growing corner of the world.  This is about our economic future.

So trade is essential to the growth of the U.S., and I think that the success in negotiating the Trans-Pacific Partnership, the TPP, will prove to be one of the real milestones of the Obama Administration.

MR. MANTEL:  Donald Trump has already criticized trade relations between Japan and the United States to the surprise of some because that has been less of an issue in recent years than of course U.S.-China trade relations.  But Japan being the biggest party to the Trans-Pacific Partnership, what would change under this?  You know, we import so much from Japan from technology to automobiles; they're a huge trade partner.  What would change under this?

SECRETARY RUSSEL: Well, the big thing that would change, Larry, are tariffs.  Our access to the Japanese market is something that presidents have, for decades, pushed and pushed.  What the TPP does is in Japan, as well as in Canada, Mexico, and in the other Asian partners like Vietnam, Malaysia, Singapore, is to take tariffs down, in some cases like automotive items from 75 percent.  In other areas such as agriculture or manufactured goods or services, all of which are incredibly important to the people of Los Angeles and the state of California, it reduces tariffs from 50 percent or 35 percent.

What TPP does is to eliminate these barriers.  There's something like 18,000 specific tariffs that will be eliminated.  Those are, as the President and others have said, 18,000 tax cuts for American businesses.

Here's the simple math:  I think on average U.S. tariffs towards the TPP partners, the Asia partners, are somewhere on the order of 1-and-a-half percent.  We're already wide open.  That's part of the reason that, perhaps, we have a trade deficit.

In the case of our TPP partners in Asia, the tariffs range from 20 percent, 30 percent and even higher.  Those will all come down to zero, not overnight but on an agreed timeline.  What that means is that is businesses in L.A., businesses in California, businesses including and especially small- and medium-sized businesses, are going to be able to export, and that means jobs, and that means prosperity.

MR. MANTEL:  But of course you have to give up something to get something, so what has enticed the other partners to sign on to this deal?  What are we giving up?

SECRETARY RUSSEL:  We're giving them what, the access to U.S. markets.  We're giving them, much more importantly for them, entree into a club.  And this is a club that the U.S. has helped to build with high standards, with safeguards, with a broad market of -- on the order of -- 40 percent of global GDP.   This gives, for example, Vietnam or Malaysia a competitive advantage not against the United States but against the other countries in Asia or in other parts of the world that have low wages but also have bad labor or environmental standards.  So they want to be part of that 40 percent of global GDP that is driving growth, and they can.

Could I tell you one thing, one secret, about TPP?

MR. MANTEL:  Yes, sure, briefly, yes.

SECRETARY RUSSEL:  If there weren't a single trade provision in TPP it would still be the best environmental safeguard agreement, the best labor rights agreement, the best good-governance agreement, and the best Internet freedom agreement that America has ever entered into.

MR. MANTEL:  And do you feel confident that it will not cost U.S. jobs?  Because, of course, that's been the history with U.S. trade deals.  Even if you argue it's good for the overall economy and that more Americans benefit than don't, it's been targeted, and the people who have been hardest hit: typically manufacturing.

SECRETARY RUSSEL:  Well, the Peterson Institute and other independent economic think-tanks have run the numbers and are convinced, as are we, that TPP will create jobs in the United States, and create good jobs.  The service industry, which is a big part of this region, agriculture, manufacturing.  There will be new jobs created by this new market.

MR. MANTEL:  We're talking with Daniel Russel, U.S. Assistant Secretary of State for East Asian and Pacific Affairs.  He's in Southern California today where he appeared at a U.S.C. U.S.-China Institute event.  He was a featured speaker at that event, joining us to talk about U.S. relations with Asia, specifically economic ones. 

With China we obviously have a huge trade deficit.  We have seen, given China's massive size and rapid ability to convert to industry, that they have done tremendous damage to U.S. manufacturing jobs.

What can the U.S. do at this point to try and reassert itself competitively with China?

SECRETARY RUSSEL:  Well, look, we think, Larry, that American businesses, American workers, can compete and win with any other country on planet Earth.  But of course we need a level playing field; we need fairness.  And what we do is we push hard for China to accept that the same rules have to apply to them as apply to us and others, and that they have to play by the rules.

Now China is in the process of growing.  It's in the process of reforming.  And we want to ensure that that growth and that reform occurs in a way that doesn't hurt American workers and doesn't hurt American companies or interests.

Trade can be contentious, but as long as everybody plays by the rules, we know that we're tremendously competitive.  The great area of competitive advantage for the United States is innovation.  We have the most dynamic, creative entrepreneurial people on Earth, and that's something that the Chinese respect and want a part of.

Now today is Earth Day, and not only from China and the United States, but representatives from 130 different countries are signing the Paris Climate Agreement in New York.  In the field of renewable energy, in terms of the technologies for clean coal or for solar power, the United States has been and remains a leader.  That's just one of many areas where we're trying to compete.

We also have negotiations underway, Larry, on a bilateral investment treaty that will set rules that protect us.

MR. MANTEL:  But of course here's the critique of how the Obama Administration has dealt with China -- and administrations prior -- that there has not been sufficient pressure put on China over its currency manipulation; there have not been significant leverage applied when it comes to environmental regulations in China.

Of course we know if China was going to pay $15 an hour to factory workers they wouldn't have factory jobs there either; it would be moved to some other lower cost location, and some of that has even occurred.  But is there not a role for the Administration to push much harder and to negotiate better terms of trade between China and the U.S.?

SECRETARY RUSSEL:  We've made tremendous headway and we're not letting up on the entire range of issues, the ones that you mentioned -- currency and the environment -- and a whole host of issues.  One of the critical ones, Larry, is the protection of intellectual property.  And the tendency or the willingness of China today to use cyber as a means of illicitly obtaining the intellectual property of our American companies is a problem that President Obama and the administration have tackled head on.  Now we have made some progress, but we are not letting up.

Look, this is a long-term project.  I think when you look back over the record of the last seven years, with China specifically, but more broadly in the Asia-Pacific region, we've made tremendous progress.

MR. MANTEL:  Trump's argument is: if the U.S. were to threaten to cut off trade with China that that would throw such a scare into the Chinese government that they'd come to the table to talk about some of these issues.

How do you think the Chinese government would respond?

SECRETARY RUSSEL: Well, look, we're in the business of using all the tools available to the U.S. government, and in partnership with industry and with trade groups to influence China's decisions and China's behavior. When it comes to trade we will do what works and we'll do what we need to.  We have, in fact, threatened to impose sanctions where China has violated either our laws or international regulations, and in some cases we have followed through.

But at the same time we've created really productive mechanisms, economic dialogues, and trade meetings between our officials that have hammered out good agreements that create big opportunities that U.S. companies have profited from.

MR. MANTEL:  But no 45 percent tariff like Donald Trump proposed?

SECRETARY RUSSEL:  We're in a race to the top, not a bottom, and I don't think that there are any trade experts who believe that starting a trade war with China is a good strategy.

MR. MANTEL:  Well, actually in fairness to Trump he back-tracked later and said, well, no, that would just be a threat to get them to comply.  But of course now they know that's a threat.

 

We're talking with the U.S. Assistant Secretary of State for East Asia and Pacific Affairs, Daniel Russel, joining us on AirTalk.

I want to talk a bit about where China is these days.  The economy is slowing after incredible growth rate that it's had for the past years.  What do you see as the biggest sorts of realignments or shifts taking place in the country?

SECRETARY RUSSEL:  Well, China has had an export-led model of economic growth for several decades, and that is understandable as a developing country, but as China enters the zone of middle income country it has to make an adjustment to a consumer-driven growth model.

The Chinese are struggling with many, many problems. Some of them are environmental, some of them are social.  They have to do with what they call the urbanization -- the tremendous number of people in rural areas who want better jobs and want better life.  They also have huge over-capacity in manufacturing, things like steel and concrete, and they got a lot of labor.  They have to create millions of jobs every year just to keep their people at work and their economy going.

Here's how to think about it:  We have a stake in the success of the Chinese economy in the sense that a weak and fragmented and unstable China is a real geostrategic threat to us and to everyone.  What we want, though, is for China to grow in a way that is consistent with international rules and that gives our companies a chance.  That's one of the shifts that we're working on.

Now we also have very deep concerns about the way that the Chinese authorities treat not only their own citizens when it comes to human rights and political space, but also the way that they treat the U.S. and the international media; the way they treat American companies; the way they treat our non-governmental organizations.  And we've made the case to China's leadership that for China to thrive in the 21st century they have to open up.

MR. MANTEL:  Well, and if China is really going to be a partner of the U.S. that would mean not conducting cyber operations against U.S. companies or entities. It would mean something that's more constructive than the kinds of destructive actions that we've seen.  Is there not more the U.S. government can do to fight back against those kinds of attacks?

SECRETARY RUSSEL:  Well, we're doing a lot and the President has made cyber a top priority.  Just last fall before President Xi came to Washington, he sent one of his top officials to negotiate a deal on cyber in which the Chinese committed not to back the theft of U.S. trade secrets as they had in the past.

Now we're monitoring this very closely and we will call them out any time we see something.  But, you know, more broadly we want to show the Chinese, and we're trying to show the Chinese, that the kind of innovation and entrepreneurship that has made America the strongest and the most prosperous country on Earth is the smart growth-path for them.

MR. MANTEL:  Thank you so much, Secretary.  We appreciate your being with us and talking about Asian, specifically China relations with the U.S.

SECRETARY RUSSEL: Entirely my pleasure, thank you, Larry.

MR. MANTEL:  Thank you so much.  Daniel Russel, U.S. Assistant Secretary of State for East Asian and Pacific Affairs.  You can share your comments about his comments on the AirTalk page at KPCC.org.