Thu. Sep 29th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

March 25, 2022

The following news report from USTR amounts to an escalation of the US-China Trade War. But there is no detail: Tai said the United States was preparing a new approach to China trade policy. Without offering specifics, she said Washington needed new, more effective tools to defend its economic interests and better compete with China.

Biden administration has not announced a China strategy or policy yet so there is no surprise that Tai could not elaborate on her new approach. Biden administration has openly, and repeatedly, characterized the US-China relationship is the most consequential relation on the earth since taking office in January of 2021. Biden administration also stated that the US-China relation is very complex, as Tai recognized: “These are two different countries, two different economies, two different situations. And we really conflate them at our peril,”

Unfortunately, Ukraine war has showed the limited bandwidth of Biden’s foreign policy team dealing with global issues other than Russia. There is no sign when the Ukraine war will reach a cease fire anytime soon. Biden administration’s extreme sanctions against Russia ruptured the security of Europe and it will take time and resources to re-establish a new peace order. President Biden announced in Europe today that “the sanctions will last till the end of the year.” It implies that even the Ukraine war cease fire were reached in few months or so, US will maintain the pressure on Russia. It is difficult to see what Tai’s “new approach” to China would get attentions in DC or Beijing.

Further, Tai, citing concerns about China’s use of forced labor in its Xinjiang region, is also developing a first-ever USTR trade strategy on the topic. The implication is profound, and her strategy will have to have the understanding and support of major economies.

STH

Not ‘sitting on its hands,’ U.S. to up pressure on China, trade czar Tai says

Andrea Shalal Fri, March 25, 2022, 10:42 AM

WASHINGTON (Reuters) – The United States is done “sitting on its hands” and will more actively pressure China, the world’s second largest economy, to change trade practices that Washington believes distort the market, top U.S. trade negotiator Katherine Tai said.

Tai, a trade lawyer and former congressional staffer appointed by President Joe Biden, inherited difficult talks with Beijing over a “Phase 1” trade deal negotiated by former President Donald Trump.

In an interview with Reuters this week, Tai said the United States was preparing a new approach to China trade policy.

Without offering specifics, she said Washington needed new, more effective tools to defend its economic interests and better compete with China. New U.S. trade investigations, which could result in tariffs or even embargoes against China, may be next, sources familiar with the matter said.

“We’re not going to stop pushing China and challenging China to reform and change. But we can’t afford to keep sitting on our hands and waiting for China to make its decision,” said Tai, the first Asian American in the job and a fluent Mandarin speaker.

“We are going to need to turn the page on the playbook,” Tai said.

A March report from her office said China had “doubled down on its harmful trade and economic abuses.” Beijing has failed to buy a promised $200 billion in additional U.S. goods and services agreed in the deal.

China now faces warnings from the United States, the world’s largest economy, not to aid Russia’s invasion of Ukraine.

In the year since Tai became trade czar, some U.S. business executives say they have been frustrated by the slow progress in punishing China. Meanwhile, the U.S. goods trade deficit with China hit $355.3 billion in 2021, the largest recorded since 2018.

Tai acknowledged frustrations, but pointed to longstanding disputes that Washington has resolved with other countries in the past year, precisely, she said, to focus on the bigger threats China poses.

Washington settled a 17-year dispute over aircraft subsidies with the EU and Britain, and a four-year battle over U.S. steel and aluminum tariffs with the EU, Britain and Japan, she said.

ALLIES, TARIFFS, CONGRESS

Tai in November revived a trilateral dialogue with the EU and Japan begun by the Trump administration, seeking a joint approach to China’s industrial subsidies and other “non-market policies and practices,” aimed at getting World Trade Organization support, a U.S. official said.

Washington is considering a new Section 301 investigation into Chinese industrial subsidies that could lead to a fresh round of tariffs or embargos, officials say.

The Biden administration may also target China’s violations of intellectual property protections under Section 337 of the Tariff Act of 1930, said William Reinsch at the Center for Strategic and International Studies.

The U.S. Congress is also considering bipartisan legislation that would bolster protections against trade secret violations and expedite investigatory and exclusionary processes.

Tai, citing concerns about China’s use of forced labor in its Xinjiang region, is also developing a first-ever USTR trade strategy on the topic.

Jamieson Greer, a partner with King & Spalding and former senior U.S. trade official, said Beijing’s response to the war in Ukraine had heightened Europe’s growing unease with China, adding Western sanctions against Russia may provide a playbook for future actions against China.

Tai said a “one size fits all” approach would not work.

“These are two different countries, two different economies, two different situations. And we really conflate them at our peril,” she said.

(Reporting by Andrea Shalal; additional reporting by David Lawder; Editing by Heather Timmons and Howard Goller)

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