Cautious reception of US trade policy change

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In an aerial view, shipping containers sit on a container ship in the Port of Oakland on September 9, 2021 in Oakland, California. [Photo/Agencies]

Trade groups and pundits have cautiously welcomed the Biden administration’s new trade policy in China, which includes “re-coupling” with the world’s second-largest economy instead of “decoupling,” but said it was “Explosive” that US tariffs on Chinese products would remain.

In a much-anticipated speech on Monday, the Biden administration’s top trade official, Katherine Tai, said she plans to have “frank” talks with Chinese officials in the coming days, and that tariffs should remain in place and could be strengthened in additional rounds, but a “targeted tariff exclusion process” would be re-established for companies hard hit by the trade war.

She also put forward a new sentence to frame the future of trade relations: “sustainable coexistence” and called for a “recoupling” of the two economies, a clear break from the calls for “decoupling” that the American hawks have advocated. . years.

“We liked that she focused on dialogue with her Chinese counterparts and the desire to pursue targeted tariff exemptions. Overall, her remarks (…) were pragmatic, in particular the desire to re-couple, and not to decouple the world’s largest economies, ”said Doug Barry, communications director at the China-US Business Council.

The council, a trade association representing more than 200 U.S. companies doing business in China, is one of a host of U.S. organizations calling for an end to punitive tariffs on goods moving between the two countries.

“The exclusion process is important for both US and Chinese companies and for supporting workers. We hope that the promise of more high-level talks will eventually create the conditions for tariff lifting, ”Barry told China Daily on Tuesday.

The United States retains tariffs imposed by the Trump administration covering more than $ 135 billion, or 93%, of intermediate input imports from China, noted Chad Bown, senior researcher at the Peterson Institute for International Economics in Washington.

Tariffs on these parts and components increase costs for American companies looking to compete not only with American consumers, but also globally and in China through exports. The Trump administration has granted some product exclusions, but most of the exemptions have expired, according to Bown.

Gary Hufbauer, senior researcher and trade expert at the institute, said the nuances of Tai’s speech on China’s trade policy were constructive, as she offered to reopen the exclusion process, without rhetorical decoupling, this which set a constructive tone for the upcoming talks.

But the new tariff exclusions will be narrow, which is “very different” from the repeal of the Trump tariffs.

“I guess the best we can hope for is the absence of new tariffs or export restrictions,” Hufbauer said in an email interview.

Jake Colvin, chairman of the National Foreign Trade Council, a Washington-based trade organization, said it was “encouraging” to see US Trade Representative Tai unveil the outlines of a comprehensive strategy to “engage China firmly and directly”.

“In the short term, it is important for the USTR to continue with a robust tariff exclusion mechanism that relieves industries plagued by the effects of the pandemic and supply chain shortages,” Colvin said in a statement. .

But some other organizations were quick to point out that the business strategy was “lackluster” and fell well short of expectations of US companies, especially when it came to pricing.

“While restarting an exclusion process is an important step forward, the best solution would have been to stop using these tariffs altogether,” said Steve Lamar, President and CEO of American Apparel & Footwear Association, a few hours after Tai’s speech.

Lamar noted that at a time when the industry is grappling with an unprecedented supply chain crisis due to infrastructure collapse, economic fallout from a damaging pandemic, and unprecedented freight costs , “It is sad that the administration has chosen to continue to subject American companies to these tax damages.”

“The current tariffs on clothing, footwear and travel items were part of a failed trade war strategy. As we have learned over the past two years, trade wars are not “good and easy to win” and, in fact, such tariffs are detrimental to American consumers, American workers and American businesses, “he said. Lamar said in a statement.

David French, senior vice president of government relations with the National Retail Federation, said American businesses across the country continued to be severely affected by the tariffs introduced by the previous administration.

“Today’s long-awaited announcement has proven that the Biden administration’s trade strategy with China is lackluster at best and will inflict more unnecessary damage on the US economy and countries. retail supply chains, ”he said.

Tu Xinquan, dean of the China Institute for WTO Studies at Beijing University of International Affairs and Economics, said her impression of Tai’s speech was generally “positive” because she did not support not decoupling and used words like “lasting coexistence” and “recoupling,” which are both new and fundamentally positive terms for the US-China trade relationship.

But Tai’s speech did not refer to the trade rules that both sides should abide by, because bilateral dialogue is important, but both sides need a “benchmark” to pass judgment, Tu said in a statement. webinar in Beijing on Tuesday.

“So if not, for example, after maybe a few conversations, the US government is ultimately not happy with the results, and it uses section 301 again. So what good is this conversation?” he said.

“But we believe that Article 301 is not in conformity with the rules of the WTO”, he added.

Tu said international rules are even more important for countries like the United States and China because both sides have the ability to hurt each other, while having the same set of rules to follow would make it easier to resolve their issues. Conflicts.

Tu also said that the state’s role in the economy should not be “demonized”, alluding to Tai’s comments that “Beijing has doubled its state-centric economic system.”

“I think that at least in recent years, the role of the state has become more and more important in many economies, not only in China, I am thinking even of the United States, and also in its speech, the Ambassador Tai also mentioned that the United States will increase its investments in many infrastructures (projects), or in education or in people’s lives, ”he said.

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