US reports no thaw in trade relations with China

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WASHINGTON – The Biden administration has offered its strongest signal to date that the combative US economic approach to China will continue, with senior administration officials saying President Biden will not immediately lift tariffs tariffs on Chinese products and that he would hold Beijing accountable for the agreed trade commitments. during the Trump administration.

Monday’s comments from Katherine Tai, the U.S. Trade Representative, and other officials provided one of the first glimpses of how the Biden administration plans to deal with a growing economic and security threat from China. They indicated that while Mr. Biden may have criticized the aggressive approach of the Trump administration, his White House will continue to try to counter China’s economic threats with trade barriers and other punitive measures.

This includes demanding that China honor the commitments it made under the Phase 1 trade deal it signed with the United States in January 2020, as well as putting pressure on China on the issue of subsidies it offers to give its industries a competitive advantage. So far, China is on the verge of falling short of its 2021 purchase commitments by more than 30%, after falling below more than 40% last year, according to Chad P. Bown , Principal Investigator at the Peterson Institute for International Economics, which tracks procurement.

China denies breaking the Phase 1 agreement, saying the pandemic has created unique circumstances.

In a speech on Monday at the Center for Strategic and International Studies, a Washington think tank, Tai highlighted how some of Beijing’s unfair practices have affected American workers and said the United States will continue to work with its allies. to counter them.

“We will use the full range of tools at our disposal and develop new tools as necessary to defend US economic interests against harmful policies and practices,” she said.

Ms Tai said she would start speaking with her Chinese counterparts in the coming days about the country’s failure to stick to its agreements. In a call to reporters on Sunday, senior administration officials did not rule out the possibility of imposing new tariffs on China if talks with it do not produce the desired results, warning Beijing that they would use every tool available to defend the United States against state-directed attacks. industrial policies that harm its workers.

The U.S. trade official plans to initiate an investigation into China’s use of subsidies under a law known as Section 301, according to people familiar with the deliberations, which could ultimately allow states United to impose more tariffs or take other punitive measures.

When asked on Monday whether the United States would pursue a Section 301 investigation, Ms. Tai declined to respond, but said she would “review all available tools.”

In a move that would offer some relief to companies importing Chinese goods, the administration said it would reinstate an expired process that gives some companies a break by excluding them from tariffs. Trade officials would make those decisions based on the priorities of the Biden administration, officials said, without elaborating.

“For too long, China’s lack of adherence to global trade standards has undermined the prosperity of Americans and others around the world,” Tai said.

“We continue to have serious concerns about China’s state-centric and non-market business practices that were not addressed in the Phase 1 agreement,” she added.

Last week, Gina Raimondo, the secretary of commerce, pointed out that China was blocking its airlines from buying “tens of billions of dollars” of products from Boeing.

“The Chinese must obey the rules,” Ms. Raimondo said in a interview with NPR Last week. “We have to stand up to them and hold them accountable. “

The Biden administration has given no indication that it plans to lower the high tariffs President Donald J. Trump has imposed on Chinese goods anytime soon, despite protests from economists and some of the companies they have driven. on the US economy.

Mr. Biden has often criticized Mr. Trump’s 18-month trade war with China as erratic and counterproductive. But more than eight months into his presidency, Mr Biden has announced few policies that differentiate his approach, beyond warmer appeals to US allies. In addition to tariffs on Chinese products, the president has maintained restrictions on the ability of Chinese companies to access American technology and expanded the list of Chinese officials under US sanctions for their role in weakening Hong Kong’s democratic institutions.

Mr. Biden’s uncompromising approach to China comes at a time of extraordinary tension between the world’s largest and second-largest economies, and remarkably little trade between their governments.

Last month, the United States announced a new deal to supply Australia with nuclear-powered submarines, an effort to push back Beijing’s military modernization and its claims to South China Sea territory. Biden also met with the leaders of Japan, Australia and India at the White House, with the aim of getting the region’s leading democracies to agree on how to handle influence and influence. China’s authoritarianism. And the United States and China are both seeking a technological advantage, even if it means cutting off each other’s access to key products.

China, after suppressing dissent in Hong Kong and essentially scrapping its guarantees to Britain to keep its hands out of the territory for decades, now regularly threatens Taiwan. The United States formally protested some of China’s actions on Sunday, after dozens of military jets flew into the Taiwan Air Defense Identification Zone on Friday and Saturday, but not over it. island itself. While U.S. officials don’t expect Beijing to act against Taiwan, they are increasingly concerned about the possibility of an accidental conflict.

Trade was an area – along with the climate – where mutual interest could spur the two countries to conclude certain agreements, even though they were in competition in other areas. But it’s unclear if they can find a way to come to an agreement amid other tensions.

Mr. Trump’s deal ended the trade war, but it did not end economic hostilities. China still maintains tariffs on 58.3% of its exports from the United States; the United States imposes tariffs on 66.4% of the products it imports from China, according to Bown.

Some Biden officials, like many economists, have made it clear that they view the tariffs as counterproductive and negatively impact U.S. consumers and manufacturers as well as Chinese businesses. Treasury Secretary Janet L. Yellen said in July that the China deal had “hurt American consumers.”

When asked if they would consider additional tariffs on China, officials said the Biden administration would not take any tools off the table. The administration planned to use the enforcement mechanism established in the trade agreement, they said, which would allow the United States to resort to new tariffs if consultations failed.

The Biden administration could face an even more difficult task in securing a trade deal with China than the Trump administration did four years ago. Republican lawmakers are prepared to pounce on any perceived weaknesses Mr. Biden perceives in China, and diplomatic and economic relations between the two countries have deteriorated.

The US release of Meng Wanzhou, a Huawei executive who had been detained in Canada at the behest of the United States, and the subsequent release by China of two Canadians and two Americans, did not do much. – something to calm the tension.

Mr Trump’s tariffs have discouraged imports of some Chinese goods, but exports to the United States have risen sharply thanks to the coronavirus pandemic, as Americans bought training equipment, furniture, toys and equipment. ‘other products during lockout.

Chinese leaders have also doubled down on the kinds of domestic industrial subsidies that the United States has long opposed. They have dramatically expanded programs, launched more than a decade ago, to eliminate their need to purchase computer chips and airliners – two of the United States’ top exports to China – among other products. industrial.

The Biden administration has explored ways to persuade China to limit its large industrial subsidies, but it will be difficult. Chinese leader Xi Jinping called for making sure other countries remain dependent on China for key products, so they don’t threaten to stop their own sales to China. The United States has done so on issues such as surveillance, forced labor, and crackdown on democracy advocates in Hong Kong.

“The dependence of the international industrial chain on our country has formed a powerful countermeasure and deterrent for foreign parties to artificially cut off the supply,” Xi said in a speech. last year.

In her speech, Ms. Tai focused on industries such as steel, solar panels and semiconductors, where China has used generous government funding and state-directed purchases to corner markets. global and crush American competitors.

“These policies have reinforced a zero-sum dynamic in the global economy where China’s growth and prosperity comes at the expense of workers and economic opportunities here in the United States and other democratic market economies,” Ms. Tai said.

Ms. Tai and other officials acknowledged that the talks may not persuade China to abandon its approach. Instead, they said, the administration’s main focus would be on strengthening the competitiveness of the U.S. economy, working with allies, and diversifying markets to limit the impact of Beijing’s harmful business practices. .

Last week, the United States and Europe announced new trade cooperation that was aimed in part at countering China’s authoritarian practices, including government intervention in the economy and illegal technology surveillance.

Keith Bradsher reported from Shanghai, and David E. Sanger contributed to Washington reporting.


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