U.S. Wants New Trade Talks with China, But Will Keep Tariffs

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The policy outlined by US Trade Representative Catherine Tai builds on Trump’s foundation

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Ms Tai said the US would pressure China to fulfill promises made as part of the phase one agreement signed in January 2020 – including maintaining the tariffs imposed by Mr Trump, which currently limits China’s exports. is about half of. The US but said it had no plans to launch an investigation into Chinese trade practices, which had been discussed within the administration.

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“We will use the full range of tools we have and develop new tools as needed to protect American economic interests from harmful policies and practices,” Ms Tai said in a speech at the Washington think tank Center for Strategic and International Studies.

At the same time, she said, the US would reopen a process for US companies to seek exemption from tariffs. That process, which ended after President Biden took office, has received complaints from manufacturers and others who say they have no cost-effective substitutes for some Chinese components.

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Taking questions after her speech, Ms Tai said the US would not take any specific new action until she spoke with her Chinese counterpart, Chinese Deputy Prime Minister Liu He.

For example, it refused to initiate enforcement action permitted under the Phase I deal. It also deferred for the time being an administrative plan to launch a trade action aimed at reducing the use of industrial subsidies to China. In his talk, he said such subsidies have hurt the American steel and solar-panel industries.

“They offered a fair summary of the shortcomings in the implementation of China’s commitments under the Phase I deal,” said Daniel Rosen, partner at the Rhodium Group, a Chinese research group. “But as to concerns going forward, he did not provide any details.”

With the tariffs in mind, “this administration is learning some of the same lessons we’ve learned over the course of four years,” said Kelly Ann Shaw, a senior trade adviser to the Trump White House who is now a partner in international trade practice. Law firm Hogan Lovells. “Tariff is a blunt instrument but appears to be the only tool we have. “

Ms Tai’s remarks were received in Beijing with a mix of relief and caution. Some officials saw positive signs that it did not accuse China of failing to complete the first phase of the deal and is looking to restart trade talks with its Chinese counterpart.

But Beijing is still disappointed with the Biden administration’s China policy. President Xi Jinping and his subordinates wanted the new White House to reverse anti-China measures imposed by Mr.

Mr Biden took other steps, including sanctioning officials over the repression of predominantly Muslim Uighurs in China’s northwestern Xinjiang region and expanding a Trump-era ban on Americans investing in Chinese companies with alleged ties to China. Despite this, the tariff has been maintained. military.

Against the backdrop of another strained relationship, the Chinese side has shown little incentive to accommodate Washington. “The Chinese side always welcomes discussions,” said an adviser to the commerce ministry in Beijing. “But we are in no hurry to do anything.”

Some foreign-policy experts in China also saw Ms Tai’s comment that “this administration will engage from a position of strength” as a sign of arrogance. Earlier this year, China’s top diplomat publicly lectured his Washington colleagues that the US “doesn’t deserve” to talk to Beijing like this.

When trade discussions resume, Beijing is expected to press for easing sanctions against Chinese companies, including telecommunications giant Huawei Technologies Co. Such sanctions are more of a concern to China’s leaders than tariffs, which have so far had limited impact on the Chinese economy.

China has doubled down on its “buy China” policy, which is running counter to the US’s attempt to buy more American products. For example, government entities and state firms have been directed to allocate a substantial portion of their technology and equipment purchases to domestic providers of information-technology hardware, software and other products.

By refusing to move forward with enforcement actions for now, the Biden administration risks a fight with Republicans who have already criticized the administration over China, said Derek Scissors, a China analyst at the American Enterprise Institute. Who has advocated strict action against Beijing. .

“If you come to the midterm elections and you haven’t done anything, you are rolling the dice that China will not matter”, he said.

But the delay also gives the US time to implement other parts of its China policy. For example, Congress has yet to approve the $52 billion in subsidy the Biden administration wants to give to companies that build semiconductor plants in the US. .

Coalition-building efforts were set back when France strongly opposed plans by the US, Britain and Australia to replace France as a supplier of submarines to Australia.

“Tai wants to take it slow because she sees the US hand getting stronger in the future,” said Scott Kennedy, analyst at CSIS China.

The focus of the first phase of the deal was Beijing’s promise to boost purchases of US agricultural and energy products and manufactured goods. The agreement called on China to increase its purchases of goods and services by an additional $200 billion during 2020 and 2021.

China missed its 2020 goods purchase target by about 40%, according to calculations by Chad Bown, a senior fellow at the Peterson Institute for International Economics, which is tracking the effort. According to data for the first 8 months of the year, China is on pace to fall 30% short of its target in 2021.

The Biden administration has spent months outlining its China policy, which has been an issue for business groups that have cited the importance of China’s vast consumer market to US companies.

Boeing Co.

China has lobbied for the resumption of trade talks as a way to help persuade China to shut down Boeing’s 737 MAX planes. The major purchase of the aircraft will help Beijing meet its procurement targets in the first phase of the deal.

“We are pleased that the administration is taking a step forward by clarifying its China strategy,” said Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce. “Engagement with allies is important, but it cannot be just engagement with allies. A direct engagement with China is essential.”

Josh Zumbrun at [email protected] and Alex Leary at [email protected]

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