The prospects for U.S.-China trade relations are likely to remain challenged after this week’s high-level diplomatic talks show that President Joe Biden’s team has no plans to completely abandon the harsh tone of the Trump administration in discussions with Beijing.
While Washington and Beijing staged a ceasefire in their head-to-head trade dispute with last year’s “first-round” deal, representatives of both sides are far from satisfied with the status quo and consider the other a key economic rival.
This competition was shown in full on Thursday, when the countries began two days of meetings in Anchorage, Alaska.
Secretary of State Antony Blinken began his remarks by noting that the U.S. would highlight “its deep concerns about China’s actions, including those of Xinjiang, Hong Kong, Taiwan and cyberattacks in the United States.” [and] economic coercion towards our allies “.
Yang Jiechi, director of the Central Foreign Affairs Committee of the Chinese Communist Party, said the US “does not have the necessary qualifications to say it wants to talk to China from a position of strength.”
While the talks were seen more as a diplomatic exercise than as an economic exercise, the thorny exchange is likely to be an initial snapshot of the bitter battles facing Biden’s trading team. And one of the most valuable business relationships in the world is at stake.
China is currently the third largest trading partner of U.S. goods with $ 558.1 billion in total (two-way) trade in 2019, according to the USTR Bureau. That massive trade volume supported approximately 911,000 jobs in the United States as of 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 amounted to $ 14 billion two years ago. China is the leading supplier of imports of goods to the United States.
Clete Willems, a former World Trade Organization litigant in the USTR Office, told CNBC on Friday that he was not surprised by the lack of progress in Anchorage.
Willems, who was a member of Trump’s sales team and is now a current partner at law firm Akin Gump, said the Anchorage meetings were more of an opportunity to officially file complaints and less of a realistic attempt at a financial remedy. .
“I had low expectations of Alaska and those expectations have been met,” Willems, with his tongue on his cheek, said of the conversations.
“I think [the Chinese government] they misread the situation with Biden’s team, and they thought these guys would come in and withdraw all Trump measures, “he added.” I think they are discovering that it will not be so. But I think they should hear it directly from Blinken. “
Trade negotiations with China are of commercial importance, but they also represent an opportunity to protect U.S. national security interests and strengthen access to critical technologies.
Weeks before the Anchorage, Alaska meetings, the Biden administration drafted an executive order directing government departments to review major supply chains, including semiconductors, high-capacity batteries, medical supplies, and ground metals. rare.
“The Biden Administration has noted that trade at all costs is not its position and will not restrict its views and setbacks on human rights or national security (for example) to have a ‘good’ trade relationship.” said Dewardric McNeal, an Obama-era policy analyst in the Department of Defense said in an email Friday.
Although Biden’s order did not mention China’s name, it directed agencies to review gaps in domestic manufacturing and supply chains dominated or run by “nations that are or are likely to become unfriendly or unstable. “.
The directive was widely considered to include China, one of the world’s largest exporters of rare earth metals, a group of materials used in the production of computer screens, state-of-the-art weapons and electric vehicles.
U.S. Secretary of State Antony Blinken (2nd R), along with National Security Adviser Jake Sullivan (R), speaks before Yang Jiechi (2nd L), director of the Central Commission office of ‘Foreign Affairs, and Wang Yi (L), Chinese Foreign Minister at the inaugural session of the US-China talks at the Captain Cook Hotel in Anchorage, Alaska, on March 18, 2021.
Frederic J. Brown | AFP | Getty Images
Still, it is possible that Chinese negotiators, including Foreign Minister Wang Yi, would expect a warmer reception from Blinken after four tumultuous years under the tenure of President Donald Trump and his top diplomat, Mike Pompeo.
The Trump administration has taken up the habit of imposing tariffs and punitive sanctions to address persistent complaints about China’s lack of intellectual property protection, mandatory technology transfers, and other unfair trade practices.
“The Biden team understands the complex interrelationships between trade and commerce between the two countries and hopes to be more specific and predictable in their identification and management of problems and concerns (more surgical and less totally destructive) in competition and cooperation” , said McNeal. , a senior policy analyst at Longview Global, added Friday.
As of Friday afternoon, the U.S. team in Alaska had not taken any action to reduce U.S. sales limits to Chinese companies, including telecommunications giant Huawei, to relax visa restrictions on members. of the Communist Party or reopen the Chinese consulate in Houston.
Negotiations with Beijing are likely to be a top priority for newly confirmed US Trade Representative Katherine Tai.
The Senate’s unanimous vote to confirm her candidacy, a first for the Biden administration, reflects bipartisan faith in her ability as an experienced and exercised business lawyer.
“Katherine Tai is just the kind of skilled, conventional person who is in a position to serve President Biden and the country pretty well,” said Mitch McConnell, the leader of the Senate minorities in the Senate floor before the confirmation vote on early March.
Katherine C. Tai addresses the Senate Finance Committee hearings to consider her candidacy for U.S. trade representative, with the rank of ambassador, in Washington, DC on February 25, 2021.
Bill O’Leary | Swimming pool | Reuters
Tai will soon face a litany of trade disputes instigated by the Trump administration, but talks with Beijing are expected to be the top priority.
She and her team are expected to review Trump’s persistent policies, including obligations on Chinese steel, aluminum, and consumer goods, as well as the components of the first-phase agreement.
“He knows how to be tough with China and he knows how to do it in coordination with others,” said Willems, who previously represented the U.S. at the WTO with Tai. He added that it will be important for Tai to serve as a voice for the commercial interests of the United States in an administration with a deep diplomatic bank.
“You have an administration with a very strong Secretary of State, very strong national security advisers, very close to President Biden and who are occupying a lot of oxygen in U.S. politics in general. And he will have to make a fist. that “.
– CNBC’s Nate Rattner and Yen Nee Lee contributed to the communication.