Biden’s U.S. trade representative describes his approach to China – the Diplomat
More than eight months after taking office, the Biden administration is ready to begin shaping its policy in China, the result of a months-long internal review process. The public disclosure began with US Trade Representative Katherine Tai’s speech on Monday at the Center for Strategic and International Studies in Washington, DC
His speech, as Tai said, was intended to “present the starting point of our administration’s strategic vision to realign our trade policies towards China in order to defend the interests of American workers, businesses, farmers and producers. , and strengthen our middle class â. But the speech itself, as well as Tai’s responses in the question-and-answer session that followed, was frustrating, vague, and lacking in detail.
One thing was clear: the Biden administration is not happy with China’s current trajectory on economic issues. âBeijing has doubled its state-centric economic system,â Tai said. “It’s increasingly clear that China’s plans do not include meaningful reforms to address concerns shared by the United States and many other countries.”
The Biden administration’s immediate response to its frustrations with China, however, has little to do with Chinese policy. Tsai said the most important steps to take will be national. She underlined “investing in our workers and our infrastructure”, for example in “[r]repair our roads and bridges, modernize our ports and provide extended broadband âas the main objective.
Second, the administration intends to continue to focus on solving trade issues between the United States and its friends – what Tai called “finding a way to deal with our own differences between us” in the Q&A – and standardize approaches to ânon-market practicesâ (ie China’s trade and economic policies).
But when it comes to Chinese policy in particular, the only clear commitment Tai made was to have âfrank conversationsâ with his Chinese counterpart to discuss the implementation of the Phase 1 trade agreement, which was concluded by the Trump administration and China in January 2020., Tai mentioned that she personally disliked the unofficial moniker of “Phase One” due to the “problem of expectations” – the implication of a follow-up âPhase 2â and beyond.)
âWhile commitments in some areas have been met and some business interests have been beneficial, there have been gaps in others,â Tai said.
Bill Reinsch, Senior Advisor and Scholl Chair in International Trade at CSIS, made several attempts during the question-and-answer session to get Tai to clarify the areas in which the USTR considers China to have failed. its commitments in the agreement. Tai, however, declined to point out specific provisions. Even the question of who Tai was looking to talk to on the Chinese side remained unanswered. (In a previous virtual meeting in May, Tai spoke with Vice Premier Liu He, the Chinese counterpart in trade talks with the former Trump administration.)
Meanwhile, on the tariff issue, Tai answered a question about possible Section 301 investigations – the rationale used by the Trump administration for imposing tariffs on a wide range of Chinese products – by saying only that the USTR has “all kinds of tools available” to deal with the problems in economic relations. Indeed, it refused to exclude future tariffs but did not express enthusiasm for them either.
In fact, Tai confirmed that the Biden administration was “restarting the tariff exclusion process” to allow US companies to seek exemption from certain tariffs on Chinese products. âWe value what we hear from our businesses, especially our small and medium-sized businesses,â which have been affected by the tariffs, Tai said. However, she also did not signal the impending tariff removal.
Although the possibility of a tariff hike has been left open, the Biden administration seems more likely to use carrots than sticks to get U.S. companies to diversify their supply chains away from China. Tai has repeatedly mentioned the importance of “incentives” to secure supply chains, saying the goal is “to encourage resilience, as opposed to mere efficiency”. She noted, however, that she did not believe that full decoupling – in the sense of separating trade on key components of the supply chain – was “a realistic outcome”. Instead, she proposed the term ârecouplingâ to describe the process of creating âa trade relationship with China where we have strong and robust positions in the supply chainâ. It’s a matter of âtradeâ versus âaddiction,â Tai said.
As for the regional trade policy of the United States, it has not been defined either. When asked if the Biden administration was interested in reviewing the US participation in the CPTPP – which China just asked to join last month – Tai again refrained from giving a yes or a not direct, but implied that the trade agreement was obsolete.
âThe TPPâ¦ was something that was negotiated several years ago now,â Tai said. “…[T]The global economy has shown us some realities in the intervening years that I think we really need to pay attention to.
In other words, don’t expect the United States to join the CPTPP in its current form. But what America’s Indo-Pacific trade policy will look like is largely a blank slate.