US to jump-start trade engagement with China

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After months of review and assessment, U.S. Trade Representative Katherine Tai says the Biden administration is set to begin confronting China directly on trade, pressing the country on implementation of the “phase one” deal and working with foreign allies to encourage Beijing to reform its trade policies.

Tai, in a speech Monday, said she isn’t prepared yet to begin talking about a second phase of the trade pact negotiated by the Trump administration, but stressed the importance of resuming direct talks with Beijing as well as holding China to its commitments under the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China – known more commonly as the “phase one” deal.

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,” Tai said.

To kickstart that process of re-engagement, senior Biden administration officials said Tai will soon begin direct talks with Chinese trade officials.

“Our goal is to bring deliberative, stable, long-term thinking into our approach – and to work through bilateral and multilateral channels,” Tai said. “The core of our strategy is a commitment to ensuring we work with our allies to create fair and open markets.”

There is plenty of concern in the U.S. ag sector about the end of the purchase commitments portion of the pact on Dec. 31, but American Farm Bureau Federation Senior Director of Congressional Relations David Salmonsen said he was pleased to hear Tai’s commitment to engaging with China and her focus on expanding access to the Chinese market for U.S. ag exporters.

“It was good to hear that they’re moving forward and are going to engage in discussions,” Salmonsen said about the speech. “I was looking for that.”

When asked after the speech about negotiating a “phase two” deal, Tai would only say she was preoccupied on discussions about China’s progress on “phase one.”

“China made commitments that benefit certain American industries, including agriculture, that we must enforce,” Tai said, adding that the current pact “has stabilized the market, especially for U.S. agricultural exports.”

Still, the Farm Bureau was looking for Tai to assure the ag sector that she would negotiate new commitments to buy U.S. ag commodities.

Farm Bureau President Zippy Duvall, in an Aug. 30 letter to Tai and USDA Secretary Tom Vilsack, said: “As you engage in continuing discussions with China and other leading export destinations, we ask you to consider the impacts of trade actions on agricultural exports and U.S. farmers and ranchers. Farm Bureau strongly urges you to resolve trade concerns with China within the boundaries of the U.S.-China Phase 1 Agreement and work to extend purchase commitments.”

China, according to an analysis by the Farm Bureau, is on track to meet its ag-purchase commitments this year, although the country fell short of 2020 commitments by about 18%.

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China agreed in “phase one” to buy about $80 billion worth of U.S. farm commodities over the two-year period. That’s equal to roughly $73.8 billion of U.S. exports after subtracting freight and insurance costs. Of that total, China committed to buy $33.4 billion worth of ag commodities in 2020 and $40.4 billion this year.  

Beyond purchase commitments, much of the success in “phase one” for the ag sector came in the form of China’s structural reforms to trade. Becky Rasdall, vice president of trade policy and international affairs for the International Dairy Foods Association, said she was pleased that the Biden administration appears committed to protecting those gains that have helped boost U.S. dairy exports.

“We got significant market stability,” Rasdall told Agri-Pulse. “There was a series of commitments on getting facilities registered to export and changes to the certificates and Chinese standards that allowed dairy exporters to export to China easier. We’re pleased with the administration’s approach to protecting that.”

Senior administration officials assured reporters that the Biden administration was intent on protecting gains made under “phase one.”

One official stressed that while the White House is not nearly satisfied with the gains under “phase one” to reform China’s overall trade practices, “it’s important that China live up to the commitments and promises it’s made. These include promises that China made in the phase one deal that benefit workers, farmers, and manufacturers across America.” 

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