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US to Have 'Frank' Discussions with China About Trade

Katherine C. Tai testifies before Senate Finance Committee in Washington.
Katherine C. Tai testifies before Senate Finance Committee in Washington.

The top United States trade negotiator said China is failing to live up to its trade commitments from last year and that Washington would soon have “frank conversations” with Beijing.

In a speech Monday in Washington, U.S. Trade Representative Katherine Tai said, “China made commitments intended to benefit certain American industries, including agriculture, that we must enforce.”

China committed to adding an extra $200 billion in purchases of U.S. exports as part of the Phase One trade deal negotiated during former President Donald Trump’s administration.

Tai said China has fallen short of its purchase promises and said she would seek a meeting with her Chinese counterpart, Vice Premier Liu He, to review the matter.

“Above all else, we must defend — to the hilt — our economic interests,” Tai said at Monday’s event, hosted by the Center for Strategic and International Studies.

Continuing Trump’s approach

William Adams, a senior vice president and senior economist with PNC Financial Services Group, characterized the overall message of Tai’s speech as “one of continuity with the Trump administration’s approach to U.S.-China trade relations.”

U.S. President Joe Biden has kept the tariffs imposed by Trump in place while Tai conducted a months-long review of U.S. trade policy with China.

Tai said Monday that going forward, the Biden administration would exclude some Chinese imports from tariffs imposed by Trump. Most previous tariff exclusions expired at the end of last year.

While she rejected the idea of Phase Two talks, as envisioned by Trump, to discuss China’s domestic subsidies and other matters, she said such issues would still be part of U.S. talks with China going forward.

U.S. trade groups, which had been pushing the Biden administration to move quickly in laying out its China trade policy, largely welcomed Tai’s remarks.

FILE - Chinese and U.S. flags flutter outside a company building in Shanghai, China April 14, 2021.
FILE - Chinese and U.S. flags flutter outside a company building in Shanghai, China April 14, 2021.

“We applaud her readiness to engage in discussions with her Chinese counterparts” on trade issues, and “we agree with Ambassador Tai that China must be held accountable for their commitments under the Phase One agreement,” Doug Barry, spokesman for US-China Business Council, told VOA.

However, Barry said that his organization was still concerned about the possibility of more tariffs and that exclusions to tariffs were particularly important for farmers in the Midwest.

Tai did not rule out opening new investigations under Section 301 of the Trade Act of 1974, which could lead to new sanctions against China.

'Zero-Sum Dynamic'

One source of tension is the subsidies China gives to industries including steel, solar and semiconductors which make it harder for U.S. companies to compete on the global market.

Tai described the situation as a “zero-sum dynamic” where “China’s growth and prosperity come at the expense of workers and economic opportunity here in the U.S. and other market-based democratic economies.”

In the past, Chinese President Xi Jinping has said it is important to the country’s national security to make Chinese goods essential to global supply chains.

“The dependence of the international industrial chain on our country has formed a powerful countermeasure and deterrent capability for foreign parties to artificially cut off supply,” Xi said in a speech in 2020.

In recent weeks as China has cracked down on its tech sector, Chinese Vice Premier Liu He sought to reassure business leaders that government support for industry will continue. “Guidelines and policies for supporting the private economy have not changed… and will not change in the future,” Liu said according to a report from Xinhua news agency.

'May Not Change'

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, told VOA in an interview that Tai was “very critical” of Chinese subsidies and that her zero-sum view of China is “very much in the thinking of the Trump administration.”

Tai’s speech also highlighted the Biden’s administration’s goal of working closer with allies to confront China, a difference from the Trump administration’s approach.

“The core of our strategy is a commitment to ensuring we work with our allies to create fair and open markets,” Tai said.

Tai said the United States would also focus on investing in U.S. workers and infrastructure across the country to “give American workers and businesses the boost needed to embrace their global competitiveness.”

She described the U.S.-China trade relationship as “one of profound consequence" and said the objective of engaging with China is "not to inflame trade tensions.”

“As the two largest economies in the world, how we relate to each other does not just affect our two countries. It impacts the entire world and billions of workers,” she said.

A senior Biden administration official told reporters Monday that China is “increasingly explicit that it is doubling down on its authoritarian, state-centric approach and is resistant to addressing our structural concerns.”

The official said, “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.”

Yinan Wang, Lin Yang and Forest Cong of the Mandarin Service contributed to this report.

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