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Biden’s New China Trade Plan Seeks to Enforce Trump-Era Trade Deal, Unwind Some China Tariffs

U.S. Trade Representative Katherine Tai testifies before a Senate Appropriations subcommittee during a hearing on Capitol Hill, in Washington, on April 28, 2021. (Sarah Silbiger/Reuters)

Top U.S. trade negotiator Katherine Tai on Oct. 4 vowed to unwind some Trump-era tariffs on Chinese goods, and press the Chinese regime for “frank” talks in a bid to end Beijing’s unfair trade practices.

Over the past decades, Beijing has poured billions in state subsidies into targeted industries such as steel, solar, and agriculture, causing the shuttering of American factories and a “zero-sum dynamic in the world economy,” Tai told an Oct. 4 panel hosted by Washington-based think tank Center for Strategic and International Studies.

“Above all else, we must defend—to the hilt—our economic interests,” she said at the event, explaining that she would be “taking all steps necessary to protect ourselves against the waves of damage inflicted over the years through unfair competition.”

Tai said that her office has conducted a comprehensive review of the phase-one trade agreement the United States reached with China last year during the Trump administration. She is expected to have a telephone call with her Chinese counterpart, Vice Premier Liu He to discuss China’s performance.

She said that Washington will start a “targeted tariff exclusion process” to exempt some Chinese imports from punitive U.S. tariffs with potential additional exclusion processes in the future.

Tai stopped short of saying whether China had fulfilled its commitments under the deal but said that “most importantly, we have to take up with China.”

 phase one trade deal signed during the Trump administration requires China to buy $200 billion worth of additional U.S. goods and services during the two-year period of 2020 and 2021. Analysis of Chinese trade data by the Peterson Institute for International Economics showed that China has met about 58 percent of its purchase commitments in 2020 and 69 percent through Aug. 2021.

deal, which halted the escalation of a trade war that heaped tariffs on hundreds of billions of dollars worth of goods from both countries, also called for the Chinese regime to improve protections for some U.S. intellectual property and market access for American agricultural biotechnology and financial services firms.

While Tai acknowledged the trade deal’s role in stabilizing the market, she shared reservations about the agreement, saying that it had not addressed China’s state-centered and nonmarket trade practices. However, the official added that she would not rule out levying new tariffs to force China to make good on its word.

U.S. trade relationship with China had traditionally focused on securing market access to China, but that approach has clashed with realities in the communist country “that are today causing us to open our eyes,” she said.

Since the Chinese regime joined the World Trade Organization (WTO) in December 2001, the United States has for three successive generations engaged with Beijing through high-level strategic dialogues to ensure that Beijing complied with WTO rules. But China’s follow-through was “inconsistent and impossible to enforce,” said Tai, who was involved in some of 27 WTO dispute settlement cases against China.

“Even when China changed the specific practices we challenged, it did not change the underlying policies, and meaningful reforms by China remained elusive,” she said.

Like Commerce Secretary Gina Raimondo, Tai believes that decoupling with China is not a “realistic outcome in terms of our global economy.” Rather, Washington will pursue a course of “durable co-existence” with Beijing, she said.

“Our objective is not to inflame trade tensions with China,” she said, defining the administration’s goal as “re-coupling,” or to have trade with China but without falling into dependency.

“China is a participant in the global economy, and it is the one that we have unresolved issues with. I don’t think there is a path to addressing those issues without having a direct conversation with China and direct communication with China,” she said.

In that vein, she said the United States will continue to support the WTO, but will also need to “be agile,” and “think outside of the box with respect to how we can be more effective in addressing the concerns that we have been struggling to address with China on trade.”

administration is also looking into incentives to encourage companies to “buy Americans up and down the supply chain,” she said.

United States will not pursue “phase two” negotiations with China on deeper structural issues such as massive subsidies to vital industries that skew global markets, because Beijing is “doubling down on its authoritarian state-centric approach,” senior administration officials said during a press call on Sunday.

“We recognize that China simply may not change, and that we have to have a strategy that deals with China as it is, rather than as we might wish it to be,” one of the officials said.

Robert Atkinson, president of the Washington-baseed think tank Information Technology and Innovation Foundation, said the administration is taking a step in the right direction. China has become too powerful on the economic and technological front for the United States to realistically change its behavior—even by working with allies, he said in a press release ahead of Tai’s speech.

“Now the West has to accept China for what it is: an unreconstructed innovation mercantilist,” Atkinson said.

Emel Akan and Reuters contributed to this report. 

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