China's new foreign minister has called for stabilizing relations with United States.
It comes amid the possibility of a meeting to reset economic ties between the two countries later this month.
Ambassador Katherine Tai serves as the U.S. Trade Representative, a child of Chinese immigrants, she's breaking barriers in that role and she's joining Walter Issacson to discuss the Biden administration's approach to trade and how her heritage influences her work.
>> thank you, Christiane and ambassador, welcome to the show.
The big news this week is reports that you will be meeting in Detroit with the Chinese commerce minister.
It would be if that happens, the highest ranking meeting for the U.S. and about a year with Chinese counterparts.
I know that's not been confirmed, but what would be the significance of that meeting if it happens?
>> I am hosting the APAC ministers responsible for trade meeting at the end of this month, and as you may know, the United States is one of the 21 member economies of APAC, and we are the host for this year, 2023, and I'm really looking forward to hosting this meeting in Detroit to show off the history of Detroit as a center of American innovation.
I think probably the most significant aspect of a meeting should happen is to provide us with an opportunity to reconnect with one of my interlocutors in Beijing to check in since the ministration transition in Beijing as president Xi Jinping has taken his unprecedented third term there.
So I think in my expectation, it will be an important reconnection, a bit of a level set in terms of reestablishing communication channels and relationships.
>> Do you think that is time for a reset or a leveling of this relationship?
It's been very confrontational, and you said in one of the talks that we don't really want to decouple from China, we can't do that.
>> We have a lot of challenges with China.
As someone on the economic team let me just focus on the economic relationship, the U.S.-China relationship is one of profound consequence in the global economy.
We are the world's two largest economies.
How we relate to each other has great implications, serious implications, not just for us, the U.S. economy, our workers and our businesses, its workers and businesses, but for the entire world.
And that is the reason why it is so important for us to take an extremely responsible, deliberative approach that is focused on being strategic, being effective in addressing the significant challenges that we do have in this relationship.
So I think that it's not confrontation that we are looking for.
However, many of the conversations that we need to have are going to be difficult.
>> Which ones are going to be the most difficult?
>> I think fundamentally, in terms of the U.S. approach to trade, we are working on rebalancing in many different ways.
When I took on this job and President Biden asked me to join his cabinet, he asked me to bring a new approach to trade that the Biden administration would advance what he specifically asked for to be worker centered trade policy.
And that reflects a recognition that the trade policies that we have pursued across administrations over the past decades, the trade policies that have been prioritized worldwide have really hit some significant limits.
We are seeing for ourselves what happens when you prioritize trade revelers Asian, the maximization of efficiency at the expense of investing in your workers.
Quick so you are saying the past 20 years of trade liberalization have actually been bad for the American worker and we have to change that, you, Jake Sullivan, President Biden changing our trade policy?
>> We have to change our approach and we are looking for different trade outcomes, we are looking for outcomes that are more inclusive.
We are advancing approaches and processes that are more inclusive, and when we say we will put workers at the center, that is the recognition that U.S. trade policy has, for too long, not had workers at its center and had place workers.
This is not just for us, but a globalization trend that we are trying to advance.
In a world where you have maximized in incentivized cost efficiency at the expense of everything else, we see for ourselves widening inequality, not just in the United States but economies around the world.
So we need more inclusive outcomes.
At the same time we've fall just gone through and are still going through economic disruptions that have come from the pandemic and demonstrated how fragile our global supply chains are.
We've done a lot of diagnoses in terms of the vulnerabilities of our supply chains, but for those of us working in trade, it is very clear that incentives that we have put into the global trading system have failed to provide for resilience in the global economy.
And that is something we badly need.
>> You talked about COVID disrupting the supply chains.
Well, today is the day that they live the federal emergency on COVID, how will that change trade and what type of snarling of trade was caused by COVID?
What will you do about that?
>> in the early days of COVID, if it is into painful to think back of March of 2020 where we had a lot of the other economies around the world went into lockdown.
At that time the entire world needed the same things at the same time.
We did not have enough supply for the demand.
So, make more supply, but what we discovered was so much of what we needed has been concentrated in one economy, and that is the Chinese economy.
In the Chinese economy was the first one to lockdown because of COVID.
So, they were not going to the factories to manufacture and very little was coming out or being produced there.
I was working for the U.S. Congress at the time and members of Congress and their staff went from being the representatives in Washington to being their supply chain representatives, to try to find whatever supply there might be around the world, and to procure it and obtain it for their constituents back at home.
I think for us, those painful lessons have to inform how we affect trade policy going forward, to ensure that the next crisis that we encounter, whether it's an extreme climate event, whether it's another epidemic or pandemic, or a natural disaster, or increasingly because of geopolitical tensions, that we have built into the global economic system, shop absorption -- shock absorption and alternative pathways, plans B and C to allow us to pivot and to adapt to the crisis situation.
>> when you are testifying in front of the House committee a few weeks ago, you got into a conversation with Congresswoman Steele, a Republican of California whose of Korean American heritage.
In some ways it was a Republican versus a Democrat, but two Asian American women debating how trade policy could be.
I would ought -- I was also struck that there was some consensus being formed on trade policy between Democrats and Republicans, unlike on other issues.
>> trade policy, something very interesting, I've seen this happen in the competition policy where the antimonopoly, antitrust people are working.
We see both of these areas to centers that are forming.
In our politics there's usually a center and then the fringes.
In trade, for instance, something that you follow, the traditional center has been through trade Republicans and pro-business new Democrats.
What we see is that the progressives on the left on the populists on the right are meeting in a new center, one that is a pro worker and pro-competition that is trying to take on the oversized corporate power looking to rebalance the equities within our system, and that gives me a huge amount of room to move on a bipartisan basis.
So on this I have a lot of hope that there is a way for us to advance trade policy that is well supported here at home, that allows us to lead with confidence around the world, but also allows us to show to the American people that we are infesting in them and we are not selling out their future through our trade policy.
>> The Biden administration has not pursued a comprehensive free-trade agreement that would help us on things like battery supply points and we are very dependent not just on batteries, but the enhanced lithium that has been refined in China.
How come we don't have a broader free-trade agreement on things like that, and is it going to hurt our electric vehicle industry?
>> I think the reason why we are not doing free-trade agreements the way we've traditionally done them, those types of negotiations is because when you lead an agency like the U.S. trade Representative's office and you are working with all of the experts in all of the specific areas with the engineers around all the cogs and wheels inside of a trade agreement, you recognize that a traditional free-trade agreement is probably liberalizing like we have negotiated in the past, is not actually a very good supply chain creating framework.
>> why is that?
>> yes, because more often than not they are designed to be leaky.
Free-trade agreements between two countries, three or more are meant to facilitate integration between those countries, and there are areas where you see very successful examples.
However, the preferences that are created through those agreements are not airtight.
They are designed to be weighted in favor of overall -- so every single one of our free-trade agreements does create benefits for what we would call free riders.
Other countries not a part of that agreement.
In the concern that we have right now is part of that aggressively liberalizing weighted in favor of liberalization type or framework has led us to the point where when you are chasing the lowest costs that production has shown that it ends up pooling in early -- and only certain places around the world and sometimes one place.
>> During this time, when we are walking away from what you call broad-based free-trade agreements, China is doing the opposite, China has created major alliances and free-trade agreements and throughout the Pacific region, and actually throughout the world, and you talk about the in Pacific economic framework that we are still talking about, we aren't even close.
There's not even much of a substance there.
We are not near signing an agreement.
Are we going to lose out to China if we let them do major free-trade agreements and we don't?
>> Know, and we can't, and we won't, and I think your characterization of the framework, while I hear it quite often, reflects a major misunderstanding of what it is we are doing.
Our vision for the in Pacific economic framework is that it is a negotiating form.
We are negotiating important types of rules and important approaches.
At the same time we see this as a framework that is going to endure over time.
This is not a one and done.
If you look at a lot -- a lot of the trade agreements that have been done, certainly ones we've done and have been done around the world, you invest all this political capital to get this one agreement done and then you move on.
And you don't look back.
Trade agreements take too long to negotiate.
They are not participatory enough, and right now, what we need our agile systems, agile approaches to cooperating with our partners and our allies to adapt to all of the changes that are happening in the global economy.
And I would argue that our failure to innovate the way that we traded, and the way that we negotiate is more dangerous to our ability to survive and to thrive then the web of what they call the new abode trade agreements that have been existing in the Asia-Pacific are a very long time.
>> Florida Governor Ron DeSantis just signed legislation saying that the Chinese could not buy land in Florida unless they were U.S. citizens or permanent residents.
Let me read you something he said.
He said, we don't want the Chinese Communist Party and the sunshine state.
We want to maintain this as a free state of Florida.
There has been similar legislation in Texas, and even something introduced in the U.S. House of Representatives.
What do you say to that?
>> I was aware of the legislation pending in introduced in Texas, but not in Florida, which sounds like it has gotten much further along.
What I would say to this is, like so many of our challenges with China, our challenges with the government and its policies, the challenge is not with the Chinese people, it is not a challenge with Chinese NIST or people of Chinese heritage.
So here in the United States, because I'm a member of the Asian American native Hawaiian Island Pacific Islander community, simply because our communities are an integral part of the American economy, the American quality of America, it is even more incumbent on us to ensure that when we take on the challenges that we see from our relating to the Chinese government, that we exercise a very high decree of discipline in defining what the challenges that we are facing.
Only by exercising that discipline do we have the opportunity to fashion policy solutions that will be tailored to addressing that challenge.
If we are lazy or sloppy in identifying the problem, the harm that we stand to do to America and our fellow Americans is significant and unacceptable.
>> Ambassador, thank you so much for joining us.
>> Thank you very much for having me.
