Biden Trade Rep Vows To Chart "New Course" On Trade With China While Copying Trump Playbook

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by Tyler Durden
Monday, Oct 04, 2021 - 02:57 PM

Update (1025ET): Effectively confirming that President Biden is copying his entire China policy from his predecessor, President Trump, while feebly trying to pass it off as his own, President Biden's US Trade Rep, Katherine Tai, laid out her plans to confront her Chinese counterparts about their adherence (or lack thereof) to the "Part 1" Trade deal negotiated by President Trump, before laying out a history of anti-competitive state-direction and subsidization in China's economy that has helped to gut American manufacturing and other industries as well.

After explaining how China undermined the American steel industry, destroying productivity and jobs, while citing semiconductors as the next target for state-directed development (benefitted, undoubtedly, by all the technology they can steal). Other industries from semiconductors to even agriculture, have also been impacted. Per Tai, Beijing has already spent $150 billion in subsidies on this.

"These efforts have reinforced a zero-sum environment where China's success has come at the expense of other economies in the US," Tai said, sounding an awful lot like her predecessor, Robert Lighthizer. "This is why we need to take a new, and pragmatic approach to dealing with our economic relationship with China evolves, so too should our tactics to defend our interests."

"Our strategy must address these concerns while also being flexible and agile that may confront future challenges from China that might arise," she added.

As for the upcoming round of virtual talks, Tai said "in the coming days I intend to have frank discussions with my counterpart in China. They will include the Phase 1 agreement...I am committed to working through the many challenges ahead in this bilateral process in order to deliver meaningful results."

As for whether she intends to launch a Section 301 investigation into whether the Chinese have been violating their promises made in the Phase 1 deal, Tai wouldn't confirm. Ultimately, the US is seeking to negotiate with Beijing about its industrial anti-competitive policies, but Tai said the Biden Admin's goal is "not to inflame trade tensions with China."

Being a dutiful bureaucrat, Tai stopped to plug her boss's domestic agenda, saying "China has been investing in their infrastructure for decades, if we are going to compete we need to make similar investments at home."

Ultimately, Tai says, the US will also work with its economic "partners" to help force China to abandon its anti-competitive, economically destructive practices.


"Above all else, we must defend, to the hilt our economic interests and that means taking ll steps necessary to protect ourselves through the waves of damage over the years via unfair competition."

"We must chart a new course to change the dynamic of our bilateral trade relationship."

"And we will work with partners to strengthen rules for global trade."

She continued.

"There is a future where all of us in the global economy can grow and succeed, where prosperity is inclusive within our own borders, and across those borders too. The path we have been on, did not take us there."

Whether there's any reason to hope for this, we simply can't say. Asking China to abandon its state-directed model of capitalism is certainly a tall order.

Also, this new approach to China shouldn't be credited to Biden: Rising up to confront China was likely one of the key critical issues that set Trump apart and above during the 2016 campaign. And his trade negotiations with the Chinese took up nearly half of his first term.

After taking a potshot at Trump, Tai's partner in the dialogue,  Bill Reinsch, Senior Adviser and Scholl Chair in International Business at CSIS, asked: "Can China be changed, or are we going to spend the next decade doing the impossible?"

Before answering, Tai acknowledged that Trump deserves some credit here: "I don't think it's fair to say that I have characterized the last administration's policies as 'failed'..."

Reinsch then followed up: "So basically, you're here to to enforce what Trump negotiated, right?"

Tai admitted "that is the starting point, because that is the structure and that is the architecture of the trade relationship we have right now."

Moving on to a discussion of the upcoming talks with her counterparts in Beijing, Tai acknowledged that per the Phase 1 agreement, "there are things that they committed to that they have not done." Finding out why those promises haven't been kept will be key.

"I think we have to have really honest conversations with China about all of the elements of the Phase 1 agreement. These are commitments China made, and commitments that workers in certain sectors have worked to.

"We will have to address where the relationship goes from the starting point."

Somebody should probably tell her...when it comes to commitments related to state subsidies, cyber-espionage and other intrusions, Beijing doesn't exactly have a great track record. But at least she's willing to admit here that there's little possibility of the two sides starting negotiations on a second part of the trade framework.

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As we previewed a few days ago, President Biden's US Trade Representative Katherine Tai is preparing to deliver a major speech outlining the Biden Administration's policies and diplomatic priorities regarding its relationship with China. The speech will be held ahead of talks where, Tai has said, she will confront the Chinese about promises from the "Phase 1" trade deal that allegedly haven't been kept.

According to Reuters, Tai is expected to criticize China for not meeting its commitments and for abusing "global trading norms": "For too long, China's lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world." She also is expected to say that China made promises to American industries, especially agriculture, and that they must be kept.

Tai is also expected to say that she intends to have 'frank conversations' with her counterpart in China. "That will include discussion over China's performance under the Phase One Agreement and we will also directly engage with China on its industrial policies." Tai will not rule out the use of any trade tools, to bring China into compliance with the deal, officials said, but did not offer a time frame for such actions. The deal is scheduled to expire at the end of 2021. She's also expected to pursue a virtual meeting with Chinese VP Liu He to discuss the trade deal "soon". Right now, the administration doesn't plan to try to pursue negotiations of a "Phase 2" deal.

Readers can watch live below:

Here's a description of the event, courtesy of CSIS:

We are pleased to welcome Ambassador Katherine Tai, U.S. Trade Representative, to CSIS for a conversation on the Biden-Harris Administration’s trade agenda. Ambassador Tai previously served as Chief Trade Counsel and Trade Subcommittee Staff Director for the House Ways and Means Committee in the United States Congress. In this capacity, she played an important role in shaping U.S. trade law, negotiations strategies, and bilateral and multilateral agreements.

As U.S. Trade Representative, Ambassador Tai serves as the president’s principal trade advisor, negotiator, and spokesperson on trade issues. She is responsible for developing U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries.

Ambassador Tai will deliver a speech outlining the Biden-Harris Administration’s approach to the bilateral trade relationship with China. Following the speech, Ambassador Tai will participate in a conversation with Bill Reinsch, Senior Adviser and Scholl Chair in International Business at CSIS, followed by audience Q&A. We hope you will be able to join us for an engaging and informative discussion.

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Finally, Rabobank's analysts had this to say: "And so back to Tai and either a US signal of détente and can-kicking, or of disengagement and ‘Yes, we can’ kicking. Politico suggests we should buckle up, with Tai telling them: "I would say that the 301 tariffs are a tool for creating the kind of effective policies, and [are] something for us to build on and to use in terms of defending to the hilt the interests of the American economy, the American worker and American businesses and our farmers, too."

"She also challenges the notion that tariffs are ultimately paid by American consumers, saying it’s a more complicated calculation than many suggest. Now *there* is a kick to the guts of the neoclassical trade consensus!"