Ode to a JCCT

In my first post on this blog I argued that cooperation on potentially catastrophic outcomes should form the centerpiece of the US-China relationship.  However, I also noted the US should continue to pursue the range of contentious issues we have with China, including in trade and investment.  There is one vehicle that is key to that effort, the US-China Joint Commission on Commerce and Trade (JCCT). (Full disclosure:  I was centrally involved in shaping the JCCT into the form it has today and, with my USTR counterparts, led the annual negotiations for three years. )

Even before the inauguration Hillary Clinton and Tim Geithner were staking claims to leadership on US-China issues.  Each expressed an interest in leading the  “son of SED” or whatever the new senior most dialogue with China was to be called.  (Note to Jonathan Fritz:  no, “son of SED” is not the guy who shot eight people in Brooklyn in the 1970s.)  As things have played out, the two Secretaries have developed a structure which gives them co-chairmanship of the new dialogue, with several subsidiary working groups which deal with specific issues, including economic.

This architecture was developed before we had a Secretary of Commerce and a US Trade Representative (US co-chairs of the JCCT) in place.  Now that we do I don’t know if any adjustments will be made in the proposed architecture.  I’m not convinced the details of the structure are all that important anyway (for example, see my earlier post on the issue of “Counterparts”).  However, I do think it is important that senior leaders in both countries take very seriously the work of JCCT.  Regardless of where it falls in the formal structure of son of SED, it is important that it get some extra attention and focus from both governments.

The Chinese government has said it has identified 40 or 50 bilateral fora with the US.  I don’t doubt it (and, I think it is a good thing to have frequent bilateral interactions at all levels in all areas).  But of these, the JCCT is one of the few that is focused like a laser on resolving specific, concrete problems in its sphere of interest.  This makes it particularly important.

A bit of history:  the JCCT has existed since the early 1980s.  For most of its existence it was chaired by the US Commerce Secretary and the Chinese Trade Minister.  In December, 2003 President Bush and Premier Wen agreed to elevate the JCCT by adding the US Trade Representative as a co-chair on the US side and by having the relevant Vice Premier (originally Wu Yi, now Wang Qishan) chair for China.  In addition, they agreed the forum would focus on advancing practical trade and investment issues.  Subsequently, in advance of each JCCT session the US and Chinese sides exchange proposed outcomes to specific trade and investment issues.  Several rounds of discussion ensue, with the resulting agreements announced when the JCCT convenes.

And I do mean specific issues.  Previous JCCT agreements have included a Chinese commitment to withdraw a unique technical standard for encryption of wireless (wifi) networks (which would have created huge problems for US chip and computer manufacturers); Chinese commitment to ensure the pre-loading of legal operating systems on computers manufactured or imported into China (important to Microsoft and other US software companies); and elimination of duplicative testing and inspection requirements on imported medical devices (very helpful for this leading US industry).  Like I said, very specific.

So why is this so important?  For two reasons:  First, because unique among the “major” bilateral fora, the JCCT is delivering concrete, short-term results on issues with a dollars and cents impact for US companies.  Long term cooperative projects are important, as is the very act of having senior officials meeting just to get to know each other.  But there also has to be a place where the two sides can reach agreement to resolve concrete trade and investment issues.  (Note:  China too has its list of issues every year, and the US works to address them.  However, since the US is the most open major economy in the world, naturally the US list is longer and more complex than is China’s.)

As I have noted in a previous post (“IPR”) there is no magic bullet to solving the large complex bilateral economic issues, and the JCCT will not in a short time frame “solve” the IPR or other complex problems.  But it can (and has) contribute to steps forward that are significant for specific companies, sectors, and groups of workers in the US.

Second is the political dimension.  Having a  forum where the two sides can announce concrete outcomes on commercially significant issues helps dampen protectionist pressure in the US and highlights the fact that China is addressing some US concerns.

So for me, the bottom line is as follows:  cooperation on potential global catastrophes should be the centerpiece of US-China relations.  However, the JCCT, with its focus on resolving concrete issues should continue to have a special place in the firmament of US-China bilateral fora.  Even while expanding the cooperative elements of the relationship, I hope both governments continue to put a particular emphasis on the work of the JCCT.

Note to the Chinese government:  Over the years that I worked on the JCCT it was clear that some on the Chinese side would have preferred to move this mechanism back to its prior focus on cooperative commercial activities.  Working internally to resolve trade issues is a much bigger headache than getting consensus on cooperative programs.  However, while the JCCT should include some cooperative initiatives, its unique contribution since 2003 has been in advancing the bilateral trade and investment agenda in concrete ways.  This is tremendously important and should not be lost as the main focus.

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