The outlook for U.S.-China trade relations is likely to remain challenged after this week’s high-level diplomatic talks showed that President Joe Biden’s team does not plan to totally abandon the Trump administration’s harsh tone in discussions with Beijing.
Although Washington and Beijing closed a ceasefire in their trade rivalry with last year’s “phase one” agreement, representatives of both sides are far from satisfied with the status quo and see the other as an important economic rival. .
This competition was on full display on Thursday, when countries began two days of meetings in Anchorage, Alaska.
Secretary of State Antony Blinken began his remarks by noting that the US would highlight “its deep concerns about China’s actions, including in Xinjiang, Hong Kong, Taiwan, cyber attacks in the United States [and] economic coercion against our allies. “
Yang Jiechi, director of the Central Committee on Foreign Affairs of the Chinese Communist Party, said the United States “is not qualified to say that it wants to speak to China from a position of strength”.
Although the negotiations were seen more as a diplomatic exercise than an economic one, the thorny exchange is probably a first snapshot of the bitter battles ahead for Biden’s trading team. At stake is one of the most valuable business relationships in the world.
China is currently the United States’ third largest goods trading partner, with $ 558.1 billion in total (bidirectional) trade in 2019, according to the USTR Office. This huge volume of trade supported about 911,000 jobs in the US in 2015, with 601,000 coming from exports of goods and 309,000 from exports of services.
China is also the third largest export market for American farmers and the annual trade in agricultural commodities totaled $ 14 billion two years ago. China is the largest supplier of goods imports in the United States.
Clete Willems, a former World Trade Organization litigant at the USTR office, told CNBC on Friday that he was not surprised by the lack of progress in Anchorage.
Willems, who was once a member of Trump’s commercial team and is now a partner at law firm Akin Gump, said the meetings in Anchorage were more of a chance to officially file complaints and less of a realistic economic remedy.
“I had little expectations for Alaska and those expectations have been met,” said Willems, ironic, of the talks.
“I think that [the Chinese government] misinterpreted the situation with the Biden team, and they thought these guys would come and reverse all Trump’s measures, “he added.” I think they are finding that that will not be the case. But I think they need to hear it directly from Blinken. “
Trade negotiations with China are commercially important, but they also represent an opportunity to protect US national security interests and strengthen access to critical technologies.
Weeks before the meetings in Anchorage, Alaska, the Biden government drafted an executive order directing government departments to review major supply chains, including those for semiconductors, high-capacity batteries, medical supplies and rare earth metals.
“The Biden administration has signaled that trade at all costs is not their position and that they will not reduce their views and retreat on human rights or national security (for example) in order to have a ‘good’ business relationship,” Dewardric McNeal, an Obama-era policy analyst at the Department of Defense, said in an email on Friday.
Although Biden’s request did not mention the name of China, he directed the agencies to examine gaps in domestic production and supply chains that are dominated or pass by “nations that are or are likely to become hostile or unstable”.
The directive was widely seen to include China, one of the largest exporters of rare earth metals in the world, a group of materials used in the production of computer screens, state-of-the-art weapons and electric vehicles.
United States Secretary of State Antony Blinken (2nd R), accompanied by national security adviser Jake Sullivan (R), speaks while facing Yang Jiechi (2nd L), director of the Central Commission Office for Foreign Affairs, and Wang Yi (L), a foreigner from China minister at the opening session of the US-China negotiations at the Captain Cook Hotel in Anchorage, Alaska, on March 18, 2021.
Frederic J. Brown | AFP | Getty Images
Still, Chinese negotiators, including Foreign Minister Wang Yi, can expect a more warm welcome from Blinken, after four tumultuous years under President Donald Trump and his top diplomat, Mike Pompeo.
The Trump administration has acquired the habit of imposing punitive tariffs and sanctions to deal with persistent complaints about China’s lack of intellectual property protection, required technology transfers and other unfair commercial practices.
“The Biden team understands the complex interconnections of trade and commerce between the two countries and expects to be more focused and predictable in identifying and managing issues and concerns (more surgical and less totally destructive) in competition and cooperation,” McNeal, an analyst senior policy officer at Longview Global, he added on Friday.
Until Friday afternoon, the US team in Alaska did nothing to lower American sales limits for Chinese companies, including telecommunications giant Huawei, relax visa restrictions for Communist Party members or reopen the Chinese consulate. in Houston.
Negotiations with Beijing are likely to be a priority for the newly confirmed U.S. Trade Representative, Katherine Tai.
The Senate’s unanimous vote to confirm his nomination, the first for the Biden government, reflects bipartisan faith in his ability as a seasoned and seasoned commercial lawyer.
“Katherine Tai is the type of qualified, conventional person who is positioned to serve President Biden and the country very well,” Senate minority leader Mitch McConnell said in the Senate floor before the confirmation vote in early March. .
Katherine C. Tai speaks at the Senate Finance Committee hearings to examine her nomination as United States Trade Representative, with the post of Ambassador, in Washington, DC, on February 25, 2021.
Bill O’Leary | Pool | Reuters
Tai will soon face a litany of trade disputes instigated by the Trump administration, but discussions with Beijing are expected to be a top priority.
She and her team are expected to review Trump’s persistent policies, including tariffs on Chinese steel, aluminum and consumer goods, as well as phase one components of the deal.
“She knows how to be tough on China and how to do it in coordination with others,” said Willems, who has already represented the United States at the WTO with Tai. He added that it will be important for Tai to be sure to serve as a voice for US commercial interests in a government with a deep diplomatic base.
“You have a government with a very strong secretary of state, very strong national security advisers, who are very close to President Biden and who are taking up a lot of space in US politics in general. what.”
– CNBC’s Nate Rattner and Yen Nee Lee contributed to the report.