U.S. Trade Representative John Deitch said Washington will take steps to force Beijing to comply with fair international rules and trade norms. Earlier Dyche said he would meet with Chinese officials in the near future to assess the first phase of trade agreements between the two countries reached under Trump. Experts say the Biden administration may slow down on tariff leverage, shifting its focus to putting pressure on Beijing’s promised structural reforms.
If Beijing is unable or unwilling to comply with international rules and norms, Washington must take steps to level the playing field, U.S. Trade Representative David Deitch told a hearing of the Senate Finance Committee on Wednesday (May 12).
Dyche said the Biden administration is working with the European Union and the United Kingdom to resolve the long-standing dispute over subsidies for Boeing and Airbus, and has had “constructive discussions” about addressing overcapacity in the steel and aluminum industries, mainly from China. constructive discussions” to address overcapacity in the steel and aluminum industries, mainly from China.
She also said the Biden administration will work with the private sector and other partners to increase efforts to expand the global manufacture and distribution of vaccines, including broad access to the raw materials needed to produce them.
What kind of signal does Dyche’s recent statement send?
Last Wednesday (May 5), Dyche told a virtual conference organized by the Financial Times that she expects to meet with her Chinese counterparts “in the near future” to discuss and assess the first phase of a Trump-era trade deal between the U.S. and China.
Meanwhile, the Wall Street Journal reported on May 12 that a person familiar with the matter said Beijing is considering a younger Vice Premier Hu Chunhua to succeed Liu He, who is in charge of economic affairs, as its special envoy for trade talks. But the source also said that this is not yet final and that the possibility of Liu He remaining in his post still exists.
Regardless of Beijing’s counterpart at that time, the first contact between Dage and his Chinese counterpart will assess and review the implementation of the first phase of the trade agreement, the outcome of which will certainly influence Washington’s decision on the retention of punitive high tariffs against Beijing; therefore, the international community, U.S.-China relations and trade experts are very concerned.
Professor Hongbin Ding, chair of the Department of Management and International Business at Loyola University Maryland, told the Voice of America that Ambassador Dyche’s statement shows that she is taking the necessary actions to keep bilateral discussions on trade negotiations going.
“So far, China has not fully implemented the goals it committed to in the first phase of the agreement. The message released by Dyche is to remind her Chinese counterparts. It also suggests that the U.S. is very interested in continuing to address the issues raised in the first phase of negotiations,” said Hongbin Ding.
Robert Ross, a professor of political science at Boston College and a fellow at Harvard University’s Fitzgerald Center for China Studies, said that the message that Dyche has conveyed so far suggests that her agenda is not only focused on the U.S.-China trade deficit, but also on China’s efforts to implement structural economic reforms. including the lack of significant steps taken by China in implementing its commitments regarding structural reforms in the economy.
“We know that the first phase of the U.S.-China trade agreement includes not only the trade imbalance and the Chinese Communist Party’s agreement to increase its purchases from the United States; it also includes the structural reforms that the Chinese Communist Party has promised to make regarding its own economic investment regulations, financial regulations, and the protection of intellectual property rights,” said Lu Bobin.
According to Lu, judging from the message sent by the Biden administration, Washington probably does not think it is too far from expecting Beijing to fulfill its commitment to increase purchases of U.S. products because of the significant impact of the new coronavirus outbreak on both the U.S. and Chinese economies. Washington’s attention will be focused on the structural reforms that Beijing has promised to undertake, and China is indeed making rather slow progress on that front.
“Therefore, the main variable and influence on the future direction of the negotiations between the U.S. and Chinese trade representatives comes from the Chinese side, and it is likely that other trade issues in the relationship will hinder the process,” said Lu Bobin.
How Biden will handle the first phase of the U.S.-China agreement
Meanwhile, reports published last week by several agencies and media outlets showed that China’s trade with the United States and the rest of the world, grew by double digits in April as consumer demand recovered. China’s trade growth appears particularly significant compared to a year ago, when the global economy was in an almost complete shutdown in response to the new coronavirus outbreak.
In addition, China’s trade and economic activity grew nicely despite the ongoing tensions between the U.S. and China and the failure of the U.S. to lift high tariffs on Chinese goods.
What will the Biden administration do with the first phase of the trade deal with China after Dyche’s meeting with his Chinese counterpart: will it scrap it, modify it, or even leave it intact?
Experts tell VOA that the Biden administration is unlikely to leave the first phase of the Trump-era trade deal intact, given the current state of the new coronavirus outbreak and the current state of U.S.-China relations.
According to Lu Bobin, a fellow at Harvard University’s Fitzgerald Center for China Studies, Trump’s trade policy and his U.S.-China trade war have focused too much on the trade deficit between the United States and China, while ignoring other factors that have contributed to those deficits.
Those factors include the often-talked-about structural advantages that China possesses, as well as the completely different growth rates, completely different markets and economic systems of the two U.S. and Chinese economies, and the savings rates of emerging economies, among others, Lu said.
“My understanding is that the U.S. doesn’t have a lot of dissatisfaction with China in terms of its purchases of U.S. goods; so the increase in the trade deficit reflects a host of economic problems that need to be addressed as a source of the deficit,” said Lubin.
In addition, the Biden administration has made it very clear that they believe trade wars and tariffs are disastrous for the American people and disastrous for the U.S. economy, and they want to slow down trade tariffs.
Hongbin Ding, a professor at Loyola University Maryland, believes that when U.S. Trade Representative Dyche re-engages with his Chinese counterpart, he may put more pressure on China in areas such as forced technology transfer, exchange rate manipulation and financial market opening.
“These issues have already been included in the first phase of the agreement; so there is reason to believe that future discussions in the U.S.-China trade talks will follow the direction set in the first phase,” Ding Hongbin said.
Ding also said it is unlikely that the Phase I trade agreement will remain intact; as the U.S. Congress is pushing for a Phase II trade agreement with China. If China is able to meet all of its Phase I commitments, the institutions and mechanisms put in place for China to implement Phase I will serve as the basis for Phase II. “Conversely, if China is not able to meet its commitments, we could see the U.S. push for an escalation of retaliatory measures.”
When it comes to how the Biden administration will handle the huge tariffs on Chinese products under Trump, experts generally believe that Biden may relent on the tariffs.
Lu Bobin told Voice of America that while the Biden administration has also made it clear that tariffs are a leverage tool the U.S. can use in U.S.-China trade. Trade tariffs could be used as leverage to negotiate a new deal with China. “And in the context of a new agreement, the U.S. could roll back or slow down the tariffs.”
Ding Hongbin, on the other hand, believes that the U.S.-China Phase I trade agreement can remain intact only if two conditions are met.
“First, China has made fairly adequate progress in meeting its Phase I commitments; and second, the USTR has other, more pressing priorities to advance. The exemption of the patent rights for the new coronavirus vaccine is one of the top priority examples,” said Hongbin Ding.
How does Dyche’s approach differ from Lighthizer’s?
After being nominated by President Biden, U.S. Trade Representative Dickey received unanimous bipartisan support from the Senate in March, becoming the first Asian-American woman to hold the position with a high approval rating of 98 votes for and zero votes against.
Given Dyche’s previous track record in trade, analysts generally view her as a problem-solving pragmatist who is expected to work to promote trade policies that benefit ordinary American workers, not just large corporations, and to be able to work closely with U.S. allies to deal with an increasingly assertive China.
The international community will also be watching closely to see how Dyche’s approach differs from that of her predecessor as she heads into U.S.-China trade talks with her counterpart in Beijing.
Ding Hongbin told VOA that while it seems difficult to draw comparisons with Dage’s predecessor at this point, as she has not yet really started her work in office, one thing that has become clear is that the stage is set very differently for Lighthizer than it was for Dage.
“Lighthizer needed to build a framework to monitor the progress of the U.S.-China trade war, whereas now Dage can choose to use the first stage framework set by his predecessor, or he can choose to start trying out some new techniques or tools,” Ding Hongbin said.
According to Ding, Dykes is currently pressuring China under the established first-phase framework; however, Dykes is critical of the “bottom-up” approach to trade and expects that she may place more emphasis on labor, environmental and human rights issues in her dealings with the Chinese government.
According to Harvard University’s F. B. Lu, there is no doubt that Dyche’s approach will reflect the larger policy goals of President Biden and his administration, which so far have only continued the previous administration’s policy of restricting U.S. technology companies from working with Chinese high-tech companies.
“From what we’ve heard from Dyche so far, it appears that the Biden administration will be more focused on structural reform of the Chinese economy than the Trump administration,” said Lubin.