The News
Semafor interviewed Michael Froman, president of the Council on Foreign Relations and former U.S. trade representative under President Obama, last week on the upcoming meeting between President Joe Biden and Chinese leader Xi Jinping and the Asia-Pacific Economic Cooperation summit in San Francisco. This interview has been edited for length and clarity.
What do you think is President Biden’s main objective going into the meeting with Xi Jinping and what would make it a successful meeting for the White House?
I think the main objective of the meeting is to establish some stability in the relationship going into 2024. The Taiwan election in January, obviously our election in November, and China likely to play a big role obviously in both. It’s not a meeting designed for some big grand bargain, for major deliverables, although there could be progress in some other areas. We saw the talks on nuclear the other day. There’s talk about restarting mil-to-mil communications. I understand there may be some progress on AI. So, I think there’s a possibility of achieving some important small steps, but overall I think the purpose is really to create a more stable relationship going into what will likely be a difficult year.
How big of a deal would it be for the U.S. and China to restore these military-to-military communications?
In the height of the Cold War, we had all sorts of communications with the Soviet Union in order to avoid accidents from escalating into bigger conflicts and so it’s a normal part, even at that point a very hostile relationship. China has been reluctant to engage in that because they feel, as I understand it, it’s the argument that having a seatbelt makes you drive more recklessly. I don’t think anybody who drives thinks about it that way, but that’s been their reluctance, it’s because they think it encourages us to challenge them more in the South China Sea or with regards to Taiwan given how close our military forces are operating — our ships, our planes. It seems like the responsible thing to do and in the common interest of both countries for there to be mechanisms to avoid potential accidents to escalate.
What do you think China’s economic situation means for Xi going into his meetings in California?
Xi is facing, clearly, a lot of economic headwinds and a number of the tools that China would normally use to deal with their growth challenges — whether it’s investing in property, investing in infrastructure, or promoting exports — aren’t particularly applicable right now. So, he’s got his hands full back home which, I think, underscores for him the value of stabilizing relations with the U.S. abroad. This is as important to him potentially as it is to President Biden.
Xi is expected to meet with some U.S. business executives at a dinner while in San Francisco. What is the significance of that and do you think that he can actually ease concerns among U.S. firms who worry about investing in China?
China has been sending this schizophrenic set of messages to the business community. On one hand, starting in the spring, they were clearly on a charm offensive trying to get American CEOs back to China, get American investment back to China. Foreign direct investment in China has plummeted. On the other hand, in implementing some of these new laws around national security, counterespionage — which has led to raids on foreign firms, detention of employees — there’s been very much of a chilling effect on foreign companies. So, I think it’s in China’s court to try and clarify how these new laws are going to be implemented. American companies can then make adjustments about whether they want to do business in China or not. Right now, there is so much uncertainty given the ambiguity of the laws and so much of the impact is in its enforcement that it would be useful for President Xi to actually lay out what the thoughts are about how these laws are going to be enforced.
You served in the Obama administration as U.S. trade representative. How dramatically has the U.S.-China economic relationship changed since you were in government?
When I was in government, the first job I had was at the White House as a deputy national security adviser. It was in the middle of the financial crisis and in the context of the G20 we worked very closely with China on stabilizing the global economy, making sure the recession didn’t turn into a depression, building support for international financial institutions and the resources they needed to deal with the crisis, and we worked very closely and very productively with them. And I remember, the first G20 summit of the Obama administration was in London in April and you had President Obama, President Hu Jintao, Prime Minister Dmitry Medvedev from Russia, and President Sarkozy of France standing in a corner and reaching an agreement on a key element of dealing with the crisis. It’s very hard to imagine that conversation happening today. So much has changed. I think in terms of the China piece in particular, throughout the Obama administration and throughout these dialogues, we were quite consistently and repeatedly expressing our concerns to China that if they didn’t deal with the outstanding economic concerns of the United States, they would lose support within the United States for a constructive relationship. And it would change the benign international environment that China has relied on for its international growth. And that’s exactly what happened.
Why do you think the Biden administration has not lifted the Trump tariffs on China, and do you think they should consider doing so?
There are a number of reasons to have tariffs. One is if you have a belief that by putting tariffs on, you’re going to reshore production in a number of industries. Then, I think one needs to look at the data and see whether that’s actually happened. And I’m not aware of data that shows significant reshoring of those sectors where we currently have tariffs or linking the tariffs to that reshoring. The other reason is to increase leverage, and in that case, you need to then engage with the other party to say, if you do A, B, and C, we’ll reduce these tariffs. I’m not sure we have a list of what our A, B, and C requests are of China on the economic side. Do we want them to reform their economy? Or would that make them stronger? Do we want them to make it easier for American businesses to locate there? Or does that encourage American companies to leave the United States? These are some fundamental questions in our economic strategy toward China which have yet to be fully answered. We know what we don’t want: We don’t want to engage for the sake of engagement. That doesn’t produce results or address the outstanding issues. But we haven’t decided what it is we do want.
There’s going to be a lot happening at APEC besides the Biden-Xi meeting. For the U.S., what do you think could be the most significant outcome from the meetings?
I think beyond the Biden-Xi meeting, perhaps the most important set of meetings to keep a focus on is the Indo Pacific Economic Framework, the 14 countries there reaching an actual legal-scrubbed agreement on supply chains, but also making progress on some tax and anti-corruption issues. The trade pillar seems to be the one that is lagging behind, but the other pillars seem to be moving forward.
What’s the impact of the U.S. decision to suspend talks on digital trade? Why is this happening?
Members of Congress have expressed concern that an agreement on digital trade might constrain their ability to legislate and regulate Big Tech here in the United States. So they’ve asked for what other countries have traditionally called policy space: The flexibility to change their laws and regulations going forward. That’s an understandable concern, particularly for a sector whose legislation and regulations is very much a work in progress and there are a lot of outstanding issues still to be worked through. I think the challenge is, the world isn’t standing still and so we’re either going to write the rules of the road or we’re going to let China write the rules of the road. And by pulling back on digital issues, which are increasingly important to a broader portion of the U.S. economy — it’s not just Big Tech. Every company is a digital company, is a data company, every manufacturer requires data as a key part of the manufacturing process, and so if we don’t have some basic disciplines around the freeflow of data across borders while respecting, obviously, individual privacy and other issues, it’s going to make it very difficult for us to continue to be the leader in this area because other countries will impose their own requirements.
How do you think the Israel-Gaza conflict will impact the conversations next week? And do you expect to see significant divisions between these countries?
I think we’re all eager to see. APEC was not normally a place that made statements on political issues, wars, particularly outside the region. It was really focused on socialization of issues affecting regional integration over time. And there clearly are divisions. I mean, Russia and China are members of APEC as well as the U.S. So, it’s hard for me to imagine there’s going to be a strong leaders’ statement one way or another on Russia-Ukraine or on Gaza-Israel.
