U.S. Establishes Trade “Picket” for China’s Unfair Trade Practices

As the results of a U.S. review of access to a range of key products from semiconductors to electric vehicle batteries were announced, the Biden administration announced Tuesday (June 8) that it would establish a new trade “picket” for unfair trade practices in China.

Senior U.S. government officials said the “supply chain trade picket” led by the Office of the U.S. Trade Representative will track specific trade violations that lead to the “hollowing out” of the U.S. supply chain and then correct them through trade means, and China is certainly one of the targets of this measure. China, of course, is also an object of this measure.

Senior U.S. government officials have also revealed that the U.S. Treasury Department is also considering launching a “232 investigation” into the national security implications of imports of neodymium magnets, which are widely used in motors and other industrial appliances, and are mainly imported from China.

President Biden ordered a review of key U.S. supply chains in February, requiring departments to report within 100 days on the supply of critical materials such as pharmaceutical raw materials and rare earths that the U.S. relies on for overseas imports. The review is not directed exclusively at China, but is part of the Biden administration’s effort to boost U.S. competitiveness in the face of the economic challenges posed by China, the world’s second-largest economy.

The U.S. faced a major challenge with a severe shortage of medical equipment at the start of the new crown epidemic, and today the U.S. is also experiencing severe shortages in several areas, including computer chips, which have forced the shutdown of major commodities such as automobiles.

According to President Biden’s order, U.S. government departments will also present a more comprehensive report on the lack of domestic manufacturing in the United States and policies to remedy the situation a year later.

Senior U.S. government officials also said that the initial U.S. review found that “several foreign governments” had engaged in unfair trade practices, including government subsidies and forced intellectual property transfers, in all four supply chains under review. But the U.S. will not fight trade wars with its own allies and partners, and its trade pickets will only focus on “very specific products.

Senior officials said that some of China’s industrial policies have weakened the U.S. supply chain, so the trade pickets will do some “advising” for U.S. policy toward China.

According to Reuters, senior officials did not reveal how to immediately alleviate the shortage of computer chips, but in pharmaceuticals, the United States will use the “Defense Production Act” to immediately accelerate the domestic manufacture of 50 to 100 key drugs in the United States, rather than continue to rely on imports in this area. To address inflationary concerns over the lack of lumber and steel supplies, senior officials said the Biden administration has launched a leadership team to focus on “housing construction, semiconductors, transportation, agriculture and food,” among other areas.

While the Biden administration is on high alert for unfair trade practices by China and is ready to counter them, it has a positive, upbeat view of U.S. trade with Taiwan. Secretary of State John Blinken testified before Congress on Monday (June 7) that the U.S. and Taiwan are engaged in trade talks and may soon have some sort of framework agreement.

The framework agreement Blinken referred to is believed to be the Trade and Investment Framework Agreement (TIFA) signed by the U.S. and Taiwan in 1994, which is a platform for U.S.-Taiwan economic and trade dialogue. The resumption of economic and trade consultations under the TIFA has been one of the important goals of Taiwan’s Tsai Ing-wen administration, and Blinken’s remarks to Congress may suggest that the resumption of economic and trade consultations under the TIFA is just around the corner.

According to Taiwan media reports, the Office of the U.S. Trade Representative has “no comment” on whether or when to resume economic and trade consultations under the U.S.-Taiwan Trade and Investment Framework Agreement, but Taiwan’s representative to the U.S., Hsiao Mei-chin, said that “efforts are underway. working on it”. Beijing, on the other hand, seems a bit impatient. When asked about Blinken’s congressional speech, Beijing Foreign Ministry spokesman Zhao Lijian said China opposes “any agreement with sovereignty implications and official nature” between China’s diplomatic partners and Taiwan, and does not send “any wrong signals” to Taiwan independence forces.