Biden’s trade policy in China is old wine in an old bottle

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After a nine-month review, US Trade Representative Katherine Tai gave a much-anticipated speech earlier this month, billed as the unveiling of the Biden administration’s “new approach” to trade with China.

Instead, to the disappointment of many trade policy experts, including supporters of the administration, the senior US official has offered no new policies beyond vague statements.

On the contrary, Tai began by implementing the policies left by Donald Trump.

“The speech essentially affirmed the change in US trade policy towards China that began under the Trump administration,” former trade negotiator Clyde Prestowitz told the Oriental Economist.

“It was a bit softer than the Trump administration,” added Prestowitz, a prominent proponent of a tough approach to China, “but certainly not a step backwards from the policies of the United States. “positive engagement” from five presidents. She didn’t really come up with a policy.

In her speech, Tai initially focused on implementing the Trump administration’s Phase 1 agreement with China, an agreement centered on Trump’s obsession with the outdated idea that Merchandise balance figures are the only measure of success.

Even though Biden has criticized this view, Tai has made it clear that the Trump tariffs imposed to enforce this deal remain in place, with a restart of the process by which U.S. companies can request a selective exclusion of those tariffs.

The senior trade policy official has expressed his intention to speak to China about its industrial policy favoring state-controlled companies and its non-market practices, none of which have been addressed in Trump policy.

But it offered no concrete path for such negotiations. And although there was a nod to the need to coordinate with allies in Europe – but not in Asia – the policy outlined remained rooted in the previous administration’s unilateralism and a similar strategy. Buy American ”.

US Trade Representative Katherine Tai. Photo: AFP / Susan Walsh

“There was nothing new and we seem to be stepping up our efforts on ineffective policies,” commented Mireya Solis, Brookings Institution expert. She pointed out the obvious disconnect between criticizing Trump’s approach to China and then declaring that your main initiative is to see through the implementation of the flawed Trumpian deal.

“My conclusion was that the administration’s policy, at least in the short term, will be the implementation of Trump’s Phase 1 deal,” commented former senior official and trade policy expert William Reinsch, who has moderated Tai’s speech at the Center for Strategic and International Studies in Washington DC.

“It’s ironic because the question I’m asked the most about the administration’s Chinese policy is how it is different from Trump’s. The answer now seems to be, ‘Not by much.’

Industrial and non-trade policy

The Biden administration is clearly imprisoned by the deep political divide in the United States and is focused on passing bills to boost spending on infrastructure and social protection. A tough approach to China remains one of the few issues on which there is a bipartisan agreement, and Biden has used the need to compete with China as the main motivation for his domestic policy agenda.

Tai’s speech also gave the impression that there has been a shift, starting under the previous administration and continuing now, towards industrial policy replacing trade policy.

“The question for Biden is not so much what to negotiate with China, as it is clear that we are not going to change China’s trade and industrial policies,” said Prestowitz, whose most recent book was about on the struggle with China for world leadership.

“So the question is, what are we going to do with ourselves? The physical infrastructure of the Chips Act passed by the Senate is a foretaste. “

Working with allies

The lack of a global, if not regional, trade strategy based on working with allies and partners has been of particular concern to some observers. In the political speech, there was only a brief mention of working with European allies in the United States-EE Trade and Technology Council to tackle “non-market practices”, but none. mention of work with Japan, South Korea and others on technology security and supply chain management issues.

Instead, the focus was on strengthening domestic industrial competitiveness and defending industries such as steel and solar panels against foreign competitors.

“The USTR is primarily talking about continuing the Trump administration’s managed commerce approach, an approach that undermines cohesion with our allies because purchasing commitments are discriminatory,” commented Solis, who heads Brookings’s Center for East. Asia Policy Studies and Japan Studies.

The erratic impulsiveness of Trump’s Twitter-fueled trade policy has thankfully disappeared, but the use of tariffs as a primary tool remains intact. And this extends to the allies. The Biden administration has yet to lift tariffs on steel and aluminum imports.

It also did not question the use of Article 232, which imposed these import controls on the grounds that they threatened national security. “Allies are being told two different things: work together on China, but things have to be produced here,” Solis said.

Meanwhile, opportunities for collaboration with American partners in Asia that could create more effective tools for dealing with China were simply not mentioned in the “new” policy. The most obvious of these missed opportunities is the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), which China has now asked to join.

Trump withdrew from the original TPP on his first day in office and a comeback is considered politically out of the question as he faces opposition from both the Democratic and Republican parties.

Representatives of the 11-country Comprehensive and Progressive Agreement for the Trans-Pacific Partnership are meeting in Santiago on March 8, 2018. China has also expressed interest in joining the CPTPP. Photo credit: AFP / Claudio Reyes

But there are other avenues of multilateral cooperation which are not so politically problematic. The priority should be to conclude a partnership agreement that would establish market and regulatory standards for the digital economy.

A core of such an agreement has already been formed by New Zealand, Singapore and Chile, now joined by South Korea.

The lack of US leadership is a particular challenge for Japan, which has made economic security a priority – aimed at protecting critical technologies and lowering the risk of supply chains dependent on China.

There is a clear convergence of interests on this with the United States, Europe, South Korea and others. But Japan’s decision to go ahead with the CPTPP, hoping the United States would eventually return, sets a precedent for the exercise of independent leadership.

Challenge for Japan

China’s candidacy for membership in the CPTPP presents a new challenge for Japan.

While the Chinese move – even if it was taken for purely cynical reasons to embarrass the United States – potentially forces China to carry out reforms to comply with the strict global standards set by the agreement, and the Chinese will likely seek to access it without full compliance. .

They will want to benefit from Vietnam’s membership terms, which allow certain exceptions to immediate compliance for its large state-run sector.

If China were to be allowed to do so, it would pose the risk of weakening the CPTPP to the point that it would not exert any effective pressure on China to open its economy to genuine competition. Japan and Australia will certainly back down, but it will be an uphill political battle.

“It will reveal how much Japan and other economies are on the front lines and we are nowhere, we are lacking in action,” Brookings expert Solis told the Oriental Economist. “How long can they wait if we don’t report we have a pulse.”

Daniel Sneider is Senior Lecturer in International Politics at Stanford University and former Foreign Correspondent for the Christian Science Monitor. This article originally appeared in The Oriental Economist and is republished with pauthorisation.


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