U.S. trade chief Katherine Tai said it’s time to forget about changing China’s behavior and instead focus on rebuilding the U.S. industrial manufacturing base and making domestic investments to counter the Asian nation.
At a congressional committee hearing Wednesday, Tai said talks last year with China on a so-called phase one trade agreement reached under President Donald Trump failed to produce results. Discussions with China have been “unduly difficult,” and the tariffs that Trump placed on China haven’t incentivized the nation to change, Tai said, while not outlining any plans to remove them.
“The United States has repeatedly sought and obtained commitments from China, only to find that follow-through or real change remains elusive,” Tai said in written testimony for the House Ways and Means Committee prior to the hearing.
“While we continue to keep the door open to conversations with China, including on its phase one commitments, we also need to acknowledge the agreement’s limitations, and turn the page on the old playbook with China, which focused on changing its behavior,” she added.
Instead, Tai said the U.S. strategy must defend “our values and economic interests from the negative impacts of the PRC’s unfair economic policies and practices.”
The comments show the world’s largest two economies remain far apart on any discussions to improve trade ties after relations plummeted to new depths in the wake of Covid-19’s global spread in early 2020. Since then, both countries have put up new barriers for businesses on national security grounds, as concerns grow among some exporting countries like Singapore about a broader push toward decoupling.
Tai noted the U.S.’s efforts to become more competitive in strategic industries and work with American allies to make supply chains more resilient. She also said her agency would do more to eliminate the use of forced labor, noting a new law designed to curb the imports of goods from China’s far west Xinjiang region over alleged genocide against ethnic Uyghur Muslims and other minority groups.
Chinese Foreign Ministry spokesman Wang Wenbin said Wednesday at a regular press briefing in Beijing that his nation was “a staunch advocate for trade facilitation and liberalization,” and urged the U.S. to “stop resorting to hegemonism and unilateral bullying.” “Such practices contravene market principles and international trade rules, damage other countries’ interests, and undermine the supply and industrial chain stability,” he said. “It is to no one’s benefit.”
In early 2020, the U.S. and China agreed to the so-called phase one deal, with the U.S. reducing some tariffs in exchange for Beijing pledging to address intellectual property theft and buy $200 billion in energy, farm and manufactured goods along with services through last December. Tai made no mention of a review of the first group of tariffs on more than $300 billion in Chinese imports needed to prevent their expiration.
Tai said on Wednesday that the U.S. will “absolutely” continue to enforce China’s phase one purchase commitments, won’t give up in that effort and is keeping all options on the table to incentivize China’s compliance.
At the hearing Wednesday, Democratic and Republican lawmakers pushed Tai to broaden and deepen the exclusion process for the tariffs and review past product denials. The Biden administration last week announced plans to reinstate exemptions from the Trump era on about two-thirds of Chinese products that were previously granted waivers from tariffs, most of which expired by the end of 2020.
The lawmakers questioned whether that decision, which only restored exclusions retroactive to October rather than all of 2021, was too limited and would therefore hurt businesses.
Tai said that the exclusion process is of the “utmost importance” to USTR, and that she will work with lawmakers to discuss their concerns about the process, without committing to broaden it.
China has rejected U.S. criticism that it has failed to live up to the purchases, arguing it had done its best to implement the agreement despite the pandemic, global economic recession and supply chain disruptions. Beijing has repeatedly called on the U.S. to take steps to improve relations, including canceling punitive tariffs, lifting all sanctions, revoking visa bans and ending export restrictions of high-tech items.
