US extends ‘olive branch’ to China on trade



“The most important element [of Tai’s speech] is its re-engagement with the Chinese and this is long overdue because we have a trade deal that reaches a significant turning point at the end of this year with the expiration of the [Phase One agreement]”Wendy Cutler, former US deputy trade representative for Japan, Korea and APEC affairs in the George W. Bush administration, told POLITICO.” Ambassador Tai has struck a realistic deal from which she does not expect much [from the Chinese] and clearly leaves its options open on how to respond, and not necessarily unilaterally, but in concert with allies and partners. “

The long-awaited speech is the cornerstone of an eight-month review of former President Donald Trump’s trade policies towards China and sets the tone for President Joe Biden’s plans to pressure Beijing on tariffs, trade commitments and other bilateral economic issues. Tai confirmed that the United States will resume talks with China over its breach of the terms of the phase one US-China trade deal implemented in January.

The Biden administration will also maintain tariffs imposed by Trump on more than $ 350 billion in Chinese goods and has warned that additional duties or other trade restrictions could follow if China does not respond to US concerns. Acknowledging the domestic economic pain inflicted by some of the tariffs, Tai also announced that the United States will reopen an exemption process for some companies in order to obtain tariff relief on China. It was a key question from U.S. companies saying the duties increase costs for manufacturers and consumers, especially if no duties are waived in the near future.

Cutler predicted a rapid follow-up to Tai’s speech by the USTR in order to demonstrate tangible progress that justifies the Biden administration’s policy of re-engagement. This progress could include a notice within days in the Federal Register of a new tariff exemption process. “I hope we wake up one morning and hear that [Tai] had a productive discussion with Liu He, ”said Cutler, who is also vice president of the Asia Society Policy Institute.

Tai’s harsh rhetoric, including a reference to the “adverse impacts” of Chinese business practices and the USTR’s intention to maintain Trump tariffs, was a critical national political message to mitigate potential criticism from Chinese GOP hawks. and the Democratic Party that the USTR was implementing unconditional re-engagement with China. “Keeping the Phase 1 agreement in place and enforcing it is something that will be broadly acceptable to both sides of the aisle,” said Kelly Ann Shaw, former senior Trump business advisor and partner at the law firm. global Hogan Lovells. “You won’t be able to satisfy everyone, but I think [Tai] broke a reasonable balance in the middle.

Shaw’s assessment is not unanimous, and at least one GOP lawmaker has challenged both the length of the USTR review and a perceived lack of detail in its results.

“It unfortunately took eight months for the administration to announce its approach to trade policy with China, only for the USTR to give no specific indication of what it plans to do,” Representative Michael McCaul said. (R-Texas), senior member of the House Foreign Affairs Committee. “They recognized that China does not want to reform and does not intend to reform, and its industrial policies are zero-sum and the negotiations have been fruitless…. [but] Tai did not explain how she plans to enforce China’s existing trade commitments, other than explaining that it is almost impossible to enforce commitments, either at the WTO or bilaterally.

Tai stressed that despite the deep disagreements between the United States and China on trade, the Biden administration’s ultimate goal was to establish a bilateral “lasting coexistence” defined by dialogue. Tai said the Biden administration will seek meaningful change from China through “frank conversations” with its Chinese counterparts and “directly engaging with China” on its industrial policies. This message appears to be designed to differentiate the approach of the Biden administration from that of the Trump administration.

“[Tai] was not there to fight with them, ”said Simon Lester, chairman of China Trade Monitor, a company that provides analysis of China’s international economic relations. “There were a few critical comments but certainly not like what we saw from the previous administration.”

Tai’s speech moved beyond China to refer to the need for the United States to work closely with its allies to coordinate China’s trade policies. The European Union is attacking Biden’s retention of Trump-era steel and aluminum tariffs imposed in 2018 on the highly questionable grounds that they were required to protect “national security.” But Tai’s reference to working with the EU to address “market distortions and other unfair trade practices” suggested a rhetorical placeholder for future trade talks between the US and the EU on such disagreements.

The Chinese government has yet to respond to Tai’s speech. But trade experts expect minimal grumbling about Tai’s criticism, given the opportunity to remove an important thorn in an otherwise resentful bilateral relationship.

“Trade was the thesis [of the U.S.-China relationship], but now it’s a sub-point as things are happening with military exercises on Taiwan, forced labor and the treatment of Uyghurs, ”Shaw said. “There are a lot of other variables that I think China is more responsive to than [trade] at present. “



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