US urges China to fully honour trade pact signed with Trump

Selina Johansson

The Biden administration on Monday criticised China for not living up to the trade deal it signed with the US in the final year of the Trump administration, as it prepares for its first trade talks with Beijing.

Katherine Tai, US trade representative, said she would hold “frank” talks with Liu He, her Chinese counterpart, in the coming days to discuss the “phase 1” deal reached in 2020 and other trade concerns.

Tai stressed in her first big China trade speech that the US did not want to “inflame trade tensions” with Beijing. But she said China had not adhered to all the purchase commitments it had made.

“It has stabilised the market, especially for US agricultural exports,” Tai said at CSIS, a think-tank. “While commitments in certain areas have been met, and certain business interests have seen benefits, there have been shortfalls in others.”

China had agreed to buy $200bn more of US goods and services than it did in 2017 — before the start of the trade war — over a two-year period until the end of 2021. But according to the Peterson Institute for International Economics, it has made only 62 per cent of the expected purchases on a prorated basis.

Underscoring the administration’s focus on enforcing the 2020 deal, US officials said Tai was not preparing to start “phase 2” negotiations to tackle broader structural issues. “China is unlikely to make meaningful reforms right now,” said one senior US official.

Tai said she would voice concern about issues beyond the 2020 agreement, as China proceeds to “pour billions of dollars into targeted industries and continues to shape its economy to the will of the state, hurting the interests of workers here in the US and around the world”.

Trade Secrets

The FT has revamped Trade Secrets, its must-read daily briefing on the changing face of international trade and globalisation.

Sign up here to understand which countries, companies and technologies are shaping the new global economy.

Tai said the Biden administration would consider exempting some goods from tariffs to align trade policy with his priorities. But she said he would “continue doing things that work” in sectors such as agriculture that have benefited from the phase 1 deal.

While president Joe Biden has confronted China on issues such as its aggression towards Taiwan and political repression, he has done little on trade, which has sparked criticism from some US companies that have urged the administration to come up with concrete policy.

US allies and partners in Asia have expressed concern that Biden has not outlined a comprehensive economic policy for the Indo-Pacific. Those concerns have risen as China seeks to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which was created after Trump withdrew from its precursor, the Trans-Pacific Partnership, or TPP.

Few experts expect Biden to join CPTPP because of the political backlash it would spark ahead of the 2022 midterm elections. Asked whether the US was warming to the idea of the trade deal, or considering trying to block China from joining, Tai suggested that Washington was not interested in joining the trade pact.

“The world economy has shown us realities in the intervening years [since TPP was agreed] that I think we really have to pay attention to.”

William Reinsch, a CSIS trade expert who interviewed Tai after her speech, said Biden’s approach did not differ substantially from Trump’s policy.

“They would violently object to saying it is just Trump’s trade policy and certainly their tone is different. But it sounds like the main thing they are going to do is enforce what Trump negotiated,” Reinsch said. “They are trying to have it both ways. They are trying to say we need to have a dialogue and conversation but that is not going to change anything.”

One difference was that Biden was working more with allies, Chad Bown of the Peterson Institute said, including through the Trade and Technology Council that the US and EU launched this week. “But that will take time to ultimately change incentives and conditions on the ground,” he said.

Follow Demetri Sevastopulo and Aime Williams on Twitter

Next Post

Global tax deal seeks to end havens, criticized for 'no teeth'

Ireland, Estonia and Hungary drop opposition to deal Global accord ensures big firms pay 15% minimum tax rate Some developing countries, U.S. Republicans sceptical PARIS, Oct 8 (Reuters) – A group of 136 countries on Friday set a minimum global tax rate of 15% for big companies and sought to […]