The U.S.-China trade relationship is one that has "significant imbalance," according to U.S. Trade Representative Katherine Tai.
"There are parts of this trade relationship that are unhealthy and have over time been damaging in some very important ways to the U.S. economy," Tai told reporters over the weekend ahead of a virtual meeting between trade ministers from the Asia-Pacific Economic Cooperation (APEC) forum.
Tai was asked if the U.S. was going to continue the Phase One agreement reached between China and the U.S. by the Trump administration, prompting her comments about the imbalance.
"It's a relationship in trade that has been marked by significant imbalance - that is in terms of performance, but also in terms of opportunity and openness of our markets to each other," Tai stated. "The United States is committed to doing everything we can to bring balance back to the U.S.-China trade relationship."
Bloomberg pointed to recent contacts between the U.S. and China which included meeting with Tai and Treasury Secretary Janet Yellen with Chinese Vice Premier Liu He. "While China said that those talks showed the two sides have restarted normal communications, there's been no public sign of any progress on the bilateral tariffs or of discussions over other economic flashpoints between the nations," Bloomberg reported.
That is in part as the Biden administration and Tai in particular have indicated there is a review underway of U.S.-China trade relations, including the Phase One agreement.
As that review is ongoing, there has been little change in the U.S.-China trade relationship. The U.S. has maintained tariffs on China over intellectual property, steel and aluminum. Those U.S. tariffs prompted a response from China in the form of retaliatory tariffs against a host of U.S. goods.
But there has been little else coming from the administration on their plans for the U.S.-China trade relationship. Tai has indicated she plans to build on the trade deal reached in January 2020 and that she respects the continuity of the U.S. policy.
But Bloomberg points out there are some signals being sent on the administration's plans for Sino-U.S. relations.
The White House's top official for Asia said last month that the U.S. is entering a period of intense competition with China, and the administration last week maintained its Trump-era ban on investment in the U.S. by some Chinese companies.
Also, China has continued to make purchases of several U.S. products, including agricultural products like corn. China bought millions of tons of U.S. corn last month but their purchases have fallen off after the surge in purchases.
We will get another batch of China trade data this week and that will show their continued step up in imports of U.S. ag goods. But attention will also be on manufactured goods and on energy products, places where they continue to run well behind the commitments they made in the Phase One agreement.
But as those in ag are aware, there were many changes undertaken by China as part of that Phase One agreement. So the imbalances that Tai is referring to would appear to be mostly outside of agriculture. That is not to say that all the U.S.-China trade issues in agriculture have been addressed -- they have not. Matters like biotech and the study of ractopamine as a feed additive are two issues where China has not fully implemented terms of the Phase One agreement.
From the Chinese side, they have continued to note the U.S. needs to take some actions like removing the tariffs in place in order to further advance the relationship.
And they also take exception to Tai's claims that China's market is not as open as it should be. Bloomberg reported that China's Minister of Commerce Wang Wentao argued that China is continuing to open up its economy despite the challenges of the pandemic, listing a number of areas in which it had reduced controls on foreign investment and trade.
Further, he also noted that China was "favorably considering" joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the updated Trans-Pacific Partnership agreement that Trump pulled out of days into his presidency.
The U.S. also wants to rejoin that pact, but has not yet indicated what kind of changes they would like to see for that to take place. That is yet another area in U.S. trade policy that has yet to be fleshed out.
U.S. agriculture export forecasts from USDA have China as the top importer of U.S. ag goods, so agriculture has clearly seen a positive, or mostly positive result out of the Phase One agreement.
So we will see. As the Biden administration's trade policy toward China and other countries becomes clearer in the weeks ahead, that will be an important matter to watch ahead, Washington Insider believes.