US trade representative says efforts on a phase-two deal with China have faltered
- ‘We need to turn the page on the old playbook,’ Katherine Tai tells Congress, saying talks to build on the phase-one deal ‘have been unduly difficult’
- ‘China continues to double down on … plans that do not include meaningful reforms that address our concerns, or those of our allies,’ she adds
Washington’s top trade official said on Wednesday that negotiations with Beijing are not progressing and that the US must deepen economic relations both with traditional allies and countries beyond that sphere, particularly in Asia and Africa.
Speaking before the House Ways and Means Committee, US Trade Representative Katherine Tai said that talks with China intended to forge an agreement on issues beyond the phase-one deal reached more than two years ago “have been unduly difficult and we need to turn the page on the old playbook”.
The House and Senate began the formal process last week of reconciling the two versions of the bill.
02:18
US trade chief calls for ‘pragmatic approach’ in reveal of China strategy
Under the trade deal reached with the Trump administration in 2020, China committed to buying US$200 billion of US goods and services above 2017 levels over a two-year period.
“It has become increasingly clear over recent years and in the past few months that China continues to double down on a state-centred economic system and plans that do not include meaningful reforms that address our concerns, or those of our allies,” Tai testified.
From its earliest days in 2021, the Biden administration has sought to bolster trade and economic ties with allies and partners, largely as a result of tensions with Beijing.
“I don’t know if there’s much basis for easing [tensions in] the relationship at this point,” Lovely said.
Tai also touted the administration’s diplomatic outreach during the hearing.
Was the US-China phase-one trade deal a ‘historic failure’, and what’s next?
“We’ve … demonstrated in our conversations with India, with Vietnam, with the Philippines, that there are ways to secure market access without a really large, comprehensive, traditional type of free-trade agreement,” she said.
With Britain, the European Union and Kenya, Tai noted, “I have spent a lot of time in the last year continuing to build our relationship on trade bilaterally, but also in multilateral forums, where we overlap, whether it’s the G7, the G20, the OECD, the WTO.
“I think that really the sky’s the limit in terms of the opportunities that are before us.”
The Biden administration’s “vigorous pursuit for better relations, particularly with Europe, has already borne significant fruit,” said Lovely.
“The view from Europe is that there’s been a sea change, and that they really see a partnership developing very rapidly with the Biden administration.”
At the hearing committee members also pressed Tai about how tough she would get on Chinese barriers to market access. But many, including Representative Adrian Smith, Republican of Nebraska, also urged setting up an easier process for US companies to win exemptions from tariffs that have been placed on Chinese goods.
Asked by Representative Vern Buchanan, Republican of Florida, whether the Biden administration is inclined to open the tariff exclusions further, Tai said that these concerns were “of utmost importance” and pledged to discuss the issue with Buchanan and other lawmakers weighing in on it.
According to Lovely, making the tariff exemption process easier and more transparent would benefit small- and medium-sized companies.
But, she said, “I think the US needs to really think about whether these tariffs serve its own strategic interests”.
Tai is to testify before the Senate Finance Committee on Thursday.
