USTR looks beyond Phase 1 pact | 2021-10-06


WASHINGTON – US Trade Representative Katherine Tai on Oct. 4, speaking at the Center for Strategic and International Studies, described the Biden administration’s approach to US-China trade relations. Ms. Tai said the approach centered on fulfilling China’s commitments under the phase one agreement, including those related to purchases of U.S. agricultural products, and working with allies to fight against China’s unfair trade practices that have yet to be fully tackled.

“The trade and economic relationship between the United States and China has profound consequences,” Ms. Tai said. “As the world’s two largest economies, our relationship does not only affect our two countries, it affects the entire world and billions of workers.”

Ms Tai said President Joe Biden welcomes competition with China, but believes competition should be handled responsibly and fairly.

“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. “In recent years, Beijing has doubled its state-centric economic system. It’s increasingly clear that China’s plans do not include meaningful reforms to address concerns shared by the United States and many other countries. “

Ms. Tai said the key to US global competitiveness begins at home.

“We need to invest in research and development and clean energy technologies, strengthen our manufacturing base and encourage companies to buy from America throughout the supply chain,” she said.

As the United States invests to build a stronger foundation that will improve its competitiveness, it must realign its trade policies with China. Ms. Tai presented three administrative priorities.

“First of all, we will discuss with China its performance under the phase one agreement,” Tai said. “China has made commitments that benefit certain American industries, including agriculture, which we must uphold.”

Second, the administration will initiate a targeted tariff exclusion process.

“We will ensure that the existing delivery structure optimally serves our economic interests,” Ms. Tai explained. “We will keep open the possibility of additional exclusion processes, if necessary. “

The purpose of this process was to mitigate the effects of certain Section 301 tariffs applied to Chinese products which had the effect of increasing costs to Americans.

“Third, we continue to have serious concerns about China’s state-centric and non-market business practices that were not addressed in the phase one agreement,” Tai said. “As we work to enforce the conditions of the first phase, we will raise these broader political concerns with Beijing. “

Ms. Tai stressed, “Last but not least, we will continue to work with our allies to shape the rules of fair trade in the 21st century and facilitate a race to the top for market economies and democracies.

Ms. Tai criticized the Trump administration’s substitution of unilateral pressure from the United States for working with allies to tackle China’s unfair trade practices.

“This has led to substantial US tariffs on imports from China and retaliation from China,” Tai said. “Against this backdrop of growing tensions, in January 2020, the previous administration and China agreed to what is commonly referred to as the phase one agreement.”

Ms Tai said the deal includes a limited set of commitments covering China’s obligations on intellectual property and technology transfer, purchases of US products and improved access for the agriculture and service sectors. financial.

“It has stabilized the market, especially for US agricultural products,” Tai said. “But our analysis indicates that while commitments in some areas have been honored and some business interests have been beneficial, there have been gaps in others.”

Agriculture has been one of the main beneficiaries of the phase one agreement. This is especially true for American grains and oilseeds.

In MY 2020-21, which ended on August 31, cumulative US soybean exports to China totaled about 35.4 million tonnes, compared to 15.7 million tonnes in 2019-2020. U.S. soybean exports to China in 2020-2021 accounted for about 58% of all U.S. soybean exports that year.

In the case of corn, the contrast between before and after the phase 1 agreement was even more pronounced. In MY 2020-21, which ended on August 31, the United States exported about 21.4 million tonnes of corn to China, up from 1.9 million tonnes the year before. US corn exports to China in 2020-21 accounted for about 31% of all US corn exports during the year.

But more needs to be done to ensure that China continues to honor its promise to buy American agricultural products, Tai said.

“As we have seen more exports to China in recent years, market share is shrinking and agriculture remains an unpredictable sector for American farmers and ranchers who rely heavily on this market,” Tai said. “Chinese regulatory authorities continue to deploy measures that limit or threaten market access for our producers.”

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