AmCham-China

Former Commerce Secretary Discusses Free Trade and Green Energy
By Josh Gartner with David Van Vooren

 

 

This interview appears in the July/August Issue of China Brief

Former US Commerce Secretary and Trade Representative Mickey Kantor recently visited Beijing and moderated a panel at a US-China clean energy event, co-sponsored by AmCham-China and the US-China Clean Energy Forum. Afterwards, Kantor talked with China Brief about US-China relations, climate change and the challenges facing new Commerce Secretary Gary Locke. AmCham-China would like to thank Fleishman-Hillard for arranging this interview. Kantor has been at the forefront of free trade and globalization issues for the past two decades. While serving under President Clinton, Kantor was the lead US negotiator for the reform of the General Agreement on Tariffs and Trade, resulting in the creation of the World Trade Organization (WTO). He also led the US negotiating teams for the North American Free Trade Agreement and the Asian Pacific Economic Cooperation Forum. In total, Kantor oversaw some 200 trade agreements between the US and other countries. A long-time advocate of free trade, Kantor has extolled the benefits globalization has had for developing nations, and he attributes the success of China and India lifting hundreds of millions of people out of poverty to open markets. But Kantor has also stressed the need for rules-based trade agreements with protections built in for labor and the environment. Kantor is currently a partner at the Washington, DC office of Mayer Brown.

Click here to listen to a podcast of this interview.

China Brief: Climate change is such an important issue to US-China relations. Do you feel that a bilateral framework is the best way to handle it?

Mickey Kantor: We have enormous potential with the two countries working together, not only addressing the problem of global warming and environmental damage, but also bringing the US and China closer together. I see possible future agreements on climate change and clean energy intellectual property rights between China and the US as a way of strengthening the relationship. Hopefully, we can have a multilateral agreement on the environment and climate change coming out of Copenhagen or—even beyond that—possibly through the WTO. But clearly the two greatest emitters in the world of greenhouse gases, China and the US, could and should come together for this kind of positive change.

CB: Can you talk a little about the areas where you have seen progress between the US and China on climate change?

MK: Part of it is psychological. In nearly every meeting now with the US and China, climate change becomes the number one issue on the agenda. There is a feeling on both sides that—either individually or collectively—we are going to have to make progress. The fact that we are the two greatest consumers of carbon based fuels and the two greatest emitters of greenhouse gases makes it that much more important.  When Secretary Clinton came to China earlier this year, she made climate change a large part of her agenda. We just heard from House Speaker Pelosi [at the US-China US-China Clean Energy Forum], and she did the same. And I believe when presidents Obama and Hu meet in November, they will make climate change the number one item on their agenda as well. That is progress in the right direction. Are we making progress on specific areas? Not as much as I would like to see, and we need to begin to implement specific concrete changes under which both countries take on certain obligations.

CB: What are some of the potential obstacles that you see to US-China cooperation?

MK: Part of it is just political will and the obstacles that each will face in their own domestic politics. The US will face it in getting the necessary legislation passed in the Congress, and there is concern as to whether or not China would adhere to its responsibilities. I am sure the Chinese will worry whether the US will adhere to its responsibilities as well, and the Chinese will face the challenge of enforcing these obligations in the provinces.

CB: What about the issue of export controls?

MK: It’s somewhat overblown, but still important. The US has export controls in what we call "dual use" items, which are items with both commercial and military applications. I think that US regulations are much too stringent and cover too many high-tech items. I always fought against them in the Clinton administration, and I won some battles and lost some battles. The export control items were under the Commerce Department when I was there, and it was easier to win those battles when I was Commerce Secretary. They are now mainly under the State Department, and it is much more difficult to win battles with the State Department on these kinds of issues. I hope that with Secretary Clinton in charge, they would begin to loosen some of those regulations and get rid of some of the items now covered.

CB: On the US side, in terms of environmental policy, the big piece of legislation that has been debated recently has been cap and trade. Can you talk a little bit about where you come down on that issue?

MK: The arguments are interesting on both sides. Some people want, of course, a carbon tax. They think it is easier, simpler and much more practical to administer. But any time you call something a tax, Congress is very reluctant to pass it. On the other hand, cap-and-trade has the kind of incentives that a carbon tax doesn’t, and these types of incentives have been able to reduce environmental damage in the past. One problem that has been stated at the US-China Clean Energy Forum is whether or not we can get a cap-and-trade bill through the Congress. Many argued that auctioning off carbon credits would just result in increased electricity cost to the consumer. That part of the legislation has been removed, so I think we now have a chance to get it through the US Senate.

CB: What advice do you have for Commerce Secretary Locke in playing an active role in environmental and trade issues?

MK: He needs to work with Ron Kirk in the US Trade Representative Office to try to push forward things like environmental and trade agreements. They also need to try to eliminate some of the export controls and trade barriers to clean energy technology. And, of course, as they sit in the cabinet they need to try to push the US administration—not that President Obama needs a lot of pushing—to move as quickly as possible toward a sustainable regime.

CB: Aside from energy, what are some of the other priorities you think Secretary Locke should have?

MK: One, of course, is to continue to open markets and increase trade as US companies try to recover from this recession. Exports benefit US companies and imports hold down prices. One of the great fallacies is that imports destroy US jobs. Of course that is not true. All you have to do is go down to the Port of LA or the Port of Long Beach and see the stevedores, truckers and railroad workers all moving goods. The largest industry in LA is not the movie, the financial services or the high-tech industries, but the goods movement industry connected to those two ports.

CB: What advice would you give to Secretary Locke for handling the pressure and responsibilities of the job?

MK: Pay attention to the Congress. Remember that foreign trade is the province of the US Congress
under the Constitution. You have got to work with the Congress and have their support, or else you can’t make progress. Everybody thinks that the Commerce Secretary works with American industry and our foreign counterparts to open up markets, but the first job is to work with the Congress.

CB: Thank you very much for your time.