- - Thursday, February 21, 2019

ANALYSIS/OPINION:

Despite the administration’s considerable effort to bring China to heel on trade, Beijing still threatens to get the better of us. This may change after President Trump meets with President Xi Jinping, both of whom have indicated a more balanced relationship may be coming soon.

But until then, continuing the steps the president has taken are in order. The proponents of free trade (which includes us) agree that a deal that halts the theft of U.S. intellectual property, ends so-called competition with businesses subsidized by the Beijing government and revises industrial policies that favor Chinese companies over American, are steps badly needed. The U.S.-China trade deficit is at a 10-year high. Something must be done that enables balanced trade and greater U.S. access to the Chinese market.

Under the current arrangements, the United States exports good things from tech companies and other service industries to China, which sends back an ocean of consumer goods that creates the trade imbalance. Reforms like those negotiated in the recent United States-Mexico-Canada Agreement will reduce Chinese subsidies and market barriers that keep U.S. companies from selling to Chinese consumers.

That would be a good start, but there would still be considerable work to do. Contemporary capitalism will defeat the worn-out version of Chinese communism in a fair fight. The United States can start doing better in deploying fifth-generation network technology that uses entirely new wireless infrastructure to achieve speeds up to 100 times faster than 4G, and promises to eliminate processing delays.

Unfortunately, the obstacle to this remarkable technology is Secretary of Commerce Wilbur Ross, who refuses to order the National Telecommunications and Information Administration, a critical agency of the Commerce Department, to make new spectrum available for 5G in a timely manner.



Ajit Pai, the chairman of the Federal Communications Commission, has been a champion of innovation. He can be counted on to deploy a spectrum for 5G that balances the interests implicated in enabling more companies to use unused or discarded mid-level spectrum. But he can’t do it until the logjam in the Commerce Department is resolved.

During the first two years of the Trump administration, the U.S. goods trade deficit with China hit $760 billion, a net wealth transfer to China on goods trade, due to American technologies and generous Chinese access to U.S. markets. If the United States and China are getting close to a deal to reset the trade relationship, that’s good news. Bloomberg News reports that “top level officials, including U.S. Treasury Secretary Steven Mnuchin and top trade negotiator Robert Lighthizer, are scheduled to meet their counterparts in Beijing as the clock ticks down to an original deadline of March 1 for reaching a breakthrough, or face higher tariffs.” The president has signaled the date may shift “if the two sides are close to a deal, though there’s little signal yet that an accord is near.” The United States needs to deal, but also to take care of business at home by getting Commerce Secretary Ross to speed approval of technologies that will put the United States on par with China on 5G deployment.

CTIA, which represents the interests of the U.S. wireless communications industry, says the United States is trailing not just China but South Korea as well in preparation for implementing 5G networks. The Chinese government subsidizes tech companies at home, which means there is little limit on the resources it can spend on a 5G program. The bigger problem is getting additional spectrum deployed quickly and getting out of the way of the private sector. Innovation is stifled when the government is a bureaucratic roadblock.

New trade deals and streamlining the deployment of 5G technologies will get the United States ahead of China. Tech giants like Apple, Microsoft, Oracle and Amazon are the pride of capitalist enterprise. The Chinese economy has little freedom for entrepreneurs, which should clear the field for the fair fight. Commerce Secretary Ross must get moving to do his part to set things right.

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