Biden Administration Unveils ‘New Approach’ to China Relationship

Trade Update • OCTOBER 6, 2021

The Biden administration this week rolled out a broad outline of its long-awaited trade strategy toward China, following an 8-month interagency policy review ordered by the White House earlier this year.

In a speech on Monday at the Center for Strategic and International Studies, U.S. Trade Representative Katherine Tai called out China’s “lack of adherence to global trading norms” and vowed that the United States would respond by “realigning our trade policies towards China to defend the interests of America’s workers, businesses, farmers, and producers.”

Four key aspects of the administration’s emerging China strategy are:

• Enforcement of the U.S.-China Phase One trade agreement;
• Restarting the Section 301 tariff exclusions process;
• Re-engaging with senior Chinese trade officials; and
• Working with allies on the trading system in general and on an approach to China.

Though in many respects a continuation of the existing U.S. trade policy towards China, Tai nonetheless said the U.S. needs “to take a new, holistic, and pragmatic approach in our relationship with China that can actually further our strategic and economic objectives for the near term and the long term.”

In a press briefing, senior officials were at pains to differentiate their “new approach” from what they called the “flawed strategy” of the Trump administration that “did not build on our strengths and did not really use our leverage to good effect.” More importantly, one official said, the former approach was “really at times chaotic, including hurting select sectors of the American economy and really not targeted at the primary concerns that we have with China’s larger structural policies.”

Phase-One Engagement

Despite not meaningfully addressing fundamental concerns with China’s trade practices, Tai said the deal still contained provisions that “were intended to benefit certain American industries, including agriculture that we must enforce.” In terms of China delivering on its pledges, Tai said “there are things that appear that they have not done” and that USTR intends to “have really honest conversations with China about all of the elements of the Phase One agreement.”

Section 301 Tariff Exclusions

Tai said she was going to “start a targeted tariff exclusion process” — one that ensures the existing enforcement structure optimally serves U.S. economic interests — and also promised to “keep open the potential for additional exclusion processes, as warranted.”

Bilateral Policy Discussions

Tai said she planned to speak with her Chinese counterpart, Vice Premier Liu He, “in the coming days” and that in addition to discussing China’s performance under the Phase One Agreement, USTR “will also directly engage with China on its industrial policies.” In this regard, Tai stated the administration’s “objective is not to inflame trade tensions with China” and cautioned that “durable coexistence requires accountability and respect for the enormous consequences of our actions.”

Multilateral Co-operation

“Finally and critically, we will continue to work with allies to shape the rules for fair trade in the 21st century, and facilitate a race to the top for market economies and democracies,” said Tai. Citing the recent Trade and Technology Council meeting, the resolution of the Boeing-Airbus subsidy dispute, and efforts to resolve the conflict over steel and aluminum tariffs as examples, other officials noted that they are “putting an end to the previous administration’s approach of fighting with our allies and weakening the alliance’s we’ve long had.”