Dyche recently told the Wall Street Journal that she has no intention of eliminating tariffs on Chinese imports in the short term. While she realizes that these tariffs could hurt the U.S. economy, it is to “correct an unbalanced and unfair trade situation. She also said that a good negotiator keeps his weight and different options open. This shows that she considers the issue of tariffs to be an important tool in the U.S.-China trade negotiations.
U.S. Trade Representative Dyche (AFP)
For his part, the spokesman for the Chinese Communist Party’s Ministry of Commerce, Gao Feng, responded Thursday that China has always opposed unilateral tariff hikes, which are not good for the Communist Party, not good for the United States, and not good for the world, and that both sides should address each other’s legitimate concerns through dialogue and consultation.
According to He Jiangbing, a mainland Chinese finance scholar, this shows that tariffs have become a major weight in the U.S.-China negotiations: “Daqi himself seems to have said that pressure should continue now and that it is not appropriate to cancel tariffs. The current U.S.-China relationship is not only not improved compared to the Trump era, but worse than it was, and it is impossible to eliminate tariffs under such circumstances.”
Statistics from the U.S. Peterson Institute for International Economics (PIIE) show that as of the beginning of this year, the U.S. still imposed tariffs averaging about 19 percent on about two-thirds of mainland Chinese goods; the Communist Party of China imposed tariffs averaging about 21 percent on nearly 60 percent of U.S. goods. Following the first phase of the trade agreement signed by U.S. and Chinese officials early last year, there has been little change in the level of tariffs imposed by the two countries on each other’s goods.
Mainland China still has significant trade barriers
U.S. Trade Representative David Deitch also released the 2021 National Trade Estimate Report on trade barriers on Wednesday, noting that significant trade barriers still exist in mainland China, including excess capacity, industrial subsidies, and investment restrictions.
The report points out that mainland China’s state-led economic and trade system makes it the world’s largest non-economic capacity violator. The persistent and severe overcapacity is particularly evident in industries such as steel, aluminum, and solar energy, while the “Made in China 2025” policy, which the authorities are spending “hundreds of billions of dollars” on, could also lead to serious overcapacity in some of China’s advanced manufacturing industries. The report also mentions that the Communist Party is still providing huge subsidies to domestic industries, some of which appear to be in violation of WTO rules.
There are signs that some U.S. allies are also being more outspoken about the CCP’s trade practices. British Trade Minister Liz Truss recently told the Financial Times, “It’s time to get tough on the CCP and its trade practices, and to push for reform of the World Trade Organization.” She also noted that it is absurd that the CCP still claims to be a developing country.
Chinese Foreign Ministry spokeswoman Hua Chunying expressed her firm opposition to the above statement at a regular press conference on Thursday: “China will never accept the baseless accusations made by the relevant British officials ……. Over the past 20 years since its accession to the WTO, China has always honored its commitments, physically complied with WTO rules and firmly upheld the multilateral trading system with the WTO at its core.”
A WTO committee of experts ruled last year that the U.S. had violated international trade rules by imposing tariffs on mainland Chinese goods in 2018 because they were only on goods from China and at rates that exceeded the standards to which the U.S. was subject in its schedule of concession commitments. Then-U.S. Trade Representative Lighthizer then pointed out that this reaffirmed the WTO’s complete inability to stop the harmful actions of the CCP and that the U.S. government would not let the CCP take advantage of the WTO.
However, Dage’s recently released report shows that the Chinese Communist Party is indeed fulfilling parts of the first phase of the U.S.-China trade agreement. For example, the CCP has introduced a series of drafts on intellectual property protection, and also reported stronger enforcement of counterfeit drugs and more frequent customs actions on counterfeit and pirated goods; the CCP has also introduced a series of laws and regulations on copyright and stricter controls on online infringement.
As countries in Europe and the United States have taken on the Chinese Communist Party trade system, Dave Calhoun, president of Boeing, the world’s largest aerospace vehicle manufacturer, told the U.S. Chamber of Commerce Aviation Summit on Wednesday that he hopes the United States will separate trade with China from issues such as human rights and continue to encourage a free trade environment between the two economic giants. He warned that if Boeing is kept out of the mainland Chinese market, European rival Airbus will take advantage of them.
Boeing and Airbus each sell a quarter of their passenger aircraft to mainland China, which has surpassed the United States as the world’s largest domestic travel market.
According to He Qinglian, an economic and social scholar from mainland China who now lives in the United States, the Boeing president’s comments represent the mainstream attitude of the U.S. business community, and the recent Xinjiang cotton incident reflects the difficulty for multinational companies to hold the moral line once human rights and trade come into conflict: “He represents the idea that the business community wants to get along with the Chinese Communist Party and needs the mainland China market. Probably all the other multinational companies, except for the U.S. real estate investment group, should be said to have this idea …… The subtlety (of the Xinjiang cotton incident) is that these companies realize that a boycott is unrealistic and it is better not to boycott, and thus their attitude has shifted.”
The latest U.S. assessment also notes that Washington is in communication with the Chinese Communist Party on various trade issues and will continue to closely monitor developments.
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