“Strategic Patience” Turns into Frustration at Delayed US-China Trade Negotiations | Voice of America
The American business community applauded Katherine Tai’s appointment as the United States’ trade representative in the early months of the Biden administration, seeing her selection as a signal that the president seriously wanted to address the severing of the country’s trade ties. with China. But months later, without any signal from the administration to reopen talks with China, the patience of some is running out.
“There is clearly frustration with this inability to regain more stable and normal trade relations with China,” said Jake Colvin, vice president for global trade issues at the National Council of Foreign Trade in Washington.
What began as an exercise in “strategic patience,” as the business community waited for the White House and various agencies to come together on a strategy to approach China, has turned into a state of exasperation over the lack of communication, did he declare.
“I think the biggest frustration for the business world is that we don’t see a roadmap that leads to this more stable economic relationship,” he said.
Implementation of “phase 1”
The Biden administration seized power just over a year after the Trump administration signed what it called “phase 1” of a trade deal meant to ease tensions between the United States and the United States. China – tensions that had led to the imposition of punitive tariffs on a wide range of goods that generally circulate between the two countries.
The Phase 1 agreement had a number of major elements, one of which was a commitment by China to increase its annual imports from the United States by $ 200 billion. As sales of U.S. products to China have increased, pandemic lockdowns throughout 2020 and the significant disruption of global trade routes in 2021 have made it difficult to get a clear measure of China’s adherence to it. that part of the market.
The agreement commits China to better enforce intellectual property laws in various sectors and to abandon policies that force companies wishing to do business in China to hand over their proprietary technologies to Chinese partners. He also negotiated the removal of barriers that prevented US agricultural and financial services companies from being fully competitive in the Chinese market, and he created rules against currency manipulation that would give Chinese manufacturers an unfair tariff advantage over them. to foreign competitors.
More work to do
The business community in the United States, while generally happy with the Phase 1 deal, saw it only as the start of a process to align China’s business practices with those of most Western countries.
In early August, the Chinese-US Business Council sent a letter from some of the largest business associations in the United States, including the American Chamber of Commerce, the Business Roundtable, and the National Retail Federation, urging the Biden administration to step up its efforts. to ensure China’s fulfillment of Phase 1 commitments and explore future talks.
“Long-standing issues remain unanswered, including state subsidies; purchases by government and public enterprises; cybersecurity, digital commerce and data governance; service issues; competition policy; regulatory data protection for new drugs, biologics and other items; China’s domestic market setting standards; outstanding agricultural policy issues; and continued barriers to market access for products manufactured in the United States, ”the letter said.
Price exclusions sought
The letter also called on the Biden administration to reinstate exclusions from the tariff regime that the Trump administration had put in place but allowed to expire.
Many US companies have complained that tariffs force them to pay higher prices for key equipment and materials than their competitors in other countries. They frequently claim that some key manufacturing inputs are only available in China, meaning they are powerless to seek out suppliers who are not subject to sanctions.
“(We) also urge the administration to retroactively reinstate product exclusions that expired in 2020; re-establish a new fair and transparent tariff exclusion process; and continue negotiations with China to remove the two countries’ counterproductive tariffs as soon as possible, ”the trade groups wrote. “These measures are absolutely necessary to mitigate the significant and continuing damage from tariffs to the United States economy, American workers, and to the national competitiveness of the United States.”
But it’s still unclear how much US businesses can expect in the near term.
“As Afghanistan dominates policy-making for weeks or more, the Biden administration faces increasing pressure to present some kind of Chinese political framework,” Derek Scissors, senior researcher at the ‘American Enterprise Institute. “They would face a lot of criticism if they entered into meaningful negotiations with China without such a framework.”
However, he said, there aren’t many political advantages for the administration to speed up talks with Beijing.
“The main obstacle to discussions between the United States and China on economic issues is that no discussion with China on economic issues has ever benefited the country,” Scissors said. “Some companies, yes; the United States as a whole, no.”
Gary Hufbauer, senior researcher at the Peterson Institute for International Economics, told VOA he agreed that domestic politics – in both countries – presented the biggest obstacle to restarting trade talks.
“If President Biden decides to restart trade talks, he would be accused by his Republican opponents in Congress of appeasing China and being weak towards China. So, pending the November 2022 elections, he does not want to have this political burden, “he said.
In China, meanwhile, President Xi Jinping recently stressed the need to achieve “common prosperity,” a term widely understood to signal some degree of income redistribution. This could lead to lower demand for luxury imports, as the Chinese who have benefited the most from the country’s strong growth in recent years become more cautious about displaying their wealth.
At the same time, Xi’s government is signaling that it may not be very interested in being further drawn into Western ways of doing business. For example, regulators have severely cracked down on Chinese companies seeking to list their shares on Western stock exchanges, requiring much more transparency than Beijing is willing to grant to companies that are often closely tied to the government.
“In China,” Hufbauer added, “what seems to be happening is that President Xi is enjoying a nationalist response, and he’s enjoying a sort of throwback to the Mao era of a pretty vehement response. against the United States. ”
Yinan Wang of the VOA Mandarin Service contributed to the reporting of this story.