MNI INTERVIEW: No Trade Letup Despite ZTE Move: Ex-US Official

By Iris Ouyang

     BEIJING (MNI) - Washington's recent decision to temporarily lift a ban on

Chinese tech giant ZTE should not be seen as a sign that the U.S. will back down

from its plans to impose tariffs on $34 bln worth of Chinese goods from July 6,

a former U.S. trade official told MNI in an interview.

     The U.S. move on ZTE "doesn't mean it solves the problems of tariffs and of

the 301 investigation," Timothy Stratford, former Assistant U.S. Trade

Representative for China Affairs at the Office of the U.S. Trade Representative

(USTR), said on Wednesday. "There are some areas in which the two governments

can cooperate, even if they haven't solved the problems in other areas," he

noted.

     On Tuesday, the U.S. Department of Commerce announced that it will allow

ZTE to temporarily resume conducting business with American tech companies over

the period July 2 - August 1. In April, the U.S. government barred American

companies from selling components and services to ZTE for seven years, in

response to ZTE's alleged violation of trade bans with Iran and North Korea.

     Stratford's view was echoed by a trade advisor to the Chinese government,

who told MNI that the ZTE issue is unrelated to the broader trade dispute

between the world's two largest economies.

     --CHINA RETALIATION

     Adding that the U.S. is "very likely" to press ahead with imposing the new

tariffs on July 6, Stratford also told MNI that China is expected to retaliate

on an equivalent basis. The Chinese government has stated that it will take

immediate retaliatory measures against the imposition of U.S. tariffs. Following

such developments, a full-blown trade war would take more than a year to end, he

said.

     Stratford pointed out that Chinese officials could also take a number of

other retaliatory measures in addition, such as delaying approvals for

investment by U.S. companies in China -- something which is already being

experienced by some American firms, he added. These concerns come despite

Chinese President Xi Jinping's statement that China will not use American

companies as a bargaining chip in trade negotiations with the U.S.

     "We are entering into a dark tunnel," Stratford said, "but we are too busy

figuring out how to hurt each other, instead of trying to figure out what the

light at the end of the tunnel looks like -- and how we can find a way to that

light."

     He noted that people from both countries, including some officials, are not

making sufficient efforts to fully understand and examine the real problems --

i.e. fundamental differences between the U.S. and Chinese economies which have

led to different trade practices.

     Stratford stated that the two countries should hold objective discussions

to address "unfair advantages" on both sides, instead of simply accusing each

other of wrongdoing.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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