USTR Katherine Tai Explains the Biden Administration’s “New Approach to the U.S.-China Trade Relationship”

In an October 4, 2021 speech, U.S. Trade Representative (USTR) Katherine Tai offered several broad insights into President Joseph Biden’s approach to the U.S.-China trade relationship. Noting that this relationship is complex, competitive and “one of profound consequence,” she stated that “[f]or too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world.” Instead of addressing concerns and meaningful reforms, China has “doubled down on its state-centered economic system.”

In her prepared remarks, USTR Tai reiterated President Biden’s message that the “key to [U.S.] global competitiveness and creating shared prosperity begins at home” with investments (i) to increase competitiveness, (ii) in research and development, clean energy technology and the U.S. manufacturing base, and (iii) to incentivize companies to Buy American. Regarding the Biden administration’s comprehensive review of U.S.-China trade, she stated that China has not lived up to its commitments under the Phase One agreement negotiated by the Trump administration. She added that the Biden administration has “serious concerns with China’s state-centered and non-market trade practices that were not addressed in the Phase One deal.”

While acknowledging that the Phase One deal may have “stabilized the market”, USTR Tai explained that it “did not meaningfully address the fundamental concerns that we have with China’s trade practices and their harmful impacts on the U.S. economy.”  She provided several examples of China’s subsidies of targeted industries and measures that limit market access for U.S. producers.  As a result, China’s policies have “reinforced a zero-sum dynamic in the world economy where China’s growth and prosperity come at the expense of workers and economic opportunity here in the U.S. and other market-based, democratic economies.”  In addressing these challenges, USTR Tai stated that the Biden administration is investing in U.S. workers and rebuilding our infrastructure, and investing in education and worker training.

In upcoming meetings with Chinese officials, USTR Tai indicated that she will have “frank conversations” about China’s performance under the Phase One agreement and its industrial policies. Given the size of the economies of the United States and China, “[d]urable coexistence requires accountability and respect for the enormous consequences of our actions.” She added that the United States will also work with “our allies and like-minded partners towards building truly fair international trade that enables healthy competition.”

Notably, after months of inquiries and complaints about the expired Section 301 tariff exclusion process for imported Chinese products, USTR Tai indicated that the agency will restart a targeted tariff exclusion process. In doing so, she stated that the office of the USTR “will ensure that the existing enforcement structure optimally serves our economic interests. We will keep open the potential for additional exclusion processes, as warranted.” Further details on this renewed exclusion process have not yet been provided by the agency.