Wed. Oct 5th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

February 9, 2022

Following the attached news reports, the Biden Administration appears to take a very strong stand and continues the trade war with China. But the US-China Phase One Trade Agreement signed between Trump Administration and China expired on December 31, 2021. The Phase One Agreement is a very carefully drafted document with detailed implementation and consultation processes. Of course, the global COVID-19 pandemic caused severe travel restrictions so much of the consultation supposed to enhance implementation and resolve disputes were interrupted. The continued tensions between the US and China after Biden took office more than a year ago, did not help. The still missing China strategy from the Biden administration is a major factor. Of course, the intensifying Ukraine crisis is a distraction from the real-world challenges of pandemic and recovery.

  1. The Trade Agreement included the standard Force Majeure clause.

Article 7.6:

2. In the event that a natural disaster or other unforeseeable event outside the control of the Parties delays a Party from timely complying with its obligations under this Agreement, the Parties shall consult with each other.

It is obvious that the COVID-19 global pandemic is a natural disaster affects the implementation of the Trade Agreement.

  1. Further, the trade agreement did offer an exit clause.

Article 8.3: Entry into Force and Termination 2. Either Party may terminate this Agreement by providing written notice of termination to the other Party. The termination shall take effect 60 days after the date on which a Party has provided that written notice to the other Party, or on such other date as the Parties may decide.

  1. US and China do not officially engage well or frequently. The US Ambassador, Nicolas Burns is not in Beijing yet. It is also not clear who is the Chinese official that U. S. Trade Representative Katherine Tai “is in the thick of those negotiations now.”
  2. The administration also may work more closely with Europe and other U.S. allies to present a united front to Beijing. “Any action against China that isn’t done in a multilateral way, isn’t worked out with Europe and with our friends in Asia, will not be as productive. It takes time to build a multilateral alley especially the world is ravaged by the COVID-19 pandemics. STH

U.S. Will Make China Account for Trade-Deal Miss, Raimondo Says

Emma Kinery and Eric Martin Wed, February 9, 2022, 8:09 AM

(Bloomberg) — The U.S. will hold China to account for failing to meet the purchase targets pledged in trade deal inherited from the Trump administration, President Joe Biden’s commerce chief said.

“We intend to hold them to account,” U.S. Secretary of Commerce Gina Raimondo said on Bloomberg Television’s European Close with Guy Johnson, Kailey Leinz and David Westin on Wednesday. U. S. Trade Representative Katherine Tai “is in the thick of those negotiations now,” she said, adding that Beijing “is not playing by the rules” as the government subsidizes companies, limiting American businesses’ ability to compete.

China was more than one-third short of its purchase commitments for goods from the U.S. under the deal crafted by the Trump administration, Bloomberg News analysis of Commerce Department Census Bureau data shared Tuesday. China bought only 62.9% of the extra goods it promised in the so-called phase one deal in the two years through the end of 2021.

China missed its purchase targets in the energy sector the most, purchasing only one-third of the exports it had pledged. It also bought less than 65% of manufacturing goods it promised.

The U.S. Chamber of Commerce is also urging the Biden administration to hold China accountable on trade, said Myron Brilliant, the executive vice president and head of international affairs.

He told reporters Wednesday knows from consultations over roughly the past week that it is considering a range of options that likely would not in the short-term mean more tariffs.

New China tariff probe among options considered by Biden -U.S. Chamber

Wed, February 9, 2022, 9:40 AM

WASHINGTON (Reuters) – The Biden administration is considering a range of options if talks over China’s unmet “Phase 1” purchasing commitments fail, including a new trade investigation that could lead to new tariffs, U.S. Chamber of Commerce officials said on Wednesday.

The administration also may work more closely with Europe and other U.S. allies to present a united front to Beijing in demanding a more level playing field for international firms, Myron Brilliant, the Chamber’s head of international affairs, told reporters.

U.S. trade data on Tuesday revealed a massive shortfall in China’s promised purchases of goods, services and energy under the former U.S. president Donald Trump’s Phase 1 trade deal implemented two years ago.

China met less than 60% of its purchasing goal, failing to meet a commitment to increase U.S. purchases by $200 billion above 2017 levels over two years that were disrupted by the COVID-19 pandemic and supply chain bottlenecks.

Brilliant said the Chamber supports the Biden administration’s talks with Chinese officials to hold them to the Phase 1 commitments.

“But should those talks not succeed in meeting the terms of the agreement, then I do think there are vehicles by which the administration can consider taking further action,” Brilliant said. “The administration is considering a range of options, and we’re not endorsing any of these options at this time, that could include obviously a 301 action and issues like that.”

The Trump administration used Section 301 of the Trade Act of 1974, a statute aimed at combating trade partners’ unfair practices, to launch tariffs on hundreds of billions of dollars in Chinese imports in 2018 and 2019.

A spokesman for the U.S. Trade Representative’s office could not immediately be reached for comment. In announcing her China trade strategy last October, top U.S. trade negotiator Katherine Tai did not rule out new tariff actions.

Brilliant said that any actions that the Biden administration takes should be done in consultation with the business community and with U.S. allies.

“Any action against China that isn’t done in a multilateral way, isn’t worked out with Europe and with our friends in Asia, will not be as productive,” he said.

(Reporting by David Lawder; Editing by Marguerita Choy)

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