Chinese trade practices still concern for U.S.

U.S. Trade Representative says former administration’s policies will remain in place but also vows to apply more pressure

The United States plans to keep pressure on China to conform to world trading standards.

However, in an Oct. 4 speech, U.S. Trade Representative Katherine Tai offered few details on how she thinks China can be forced to change.

“It is increasingly clear China’s plans do not include meaningful reforms to address the concerns that have been shared by the United States and many other countries,” said Tai in an address to the Center for Strategic and International Studies in Washington, D.C.

“In recent years China’s leaders have doubled down on their state-centric economic model.”

Tai reiterated the decision taken by U.S. President Joe Biden’s administration to continue with a Phase One trade arrangement reached between China and former U.S. President Donald Trump that has seen millions of tonnes of U.S. soybeans and other products head to China, even though she acknowledged those measures don’t address the underlying issues that bother the U.S.

“We continue to have serious concerns with China’s state-centric and non-market trade practices that were not addressed in the Phase One deal,” said Tai, who was involved with a number of Trump-era trade negotiations with China.

Tai plans direct talks with her counterpart in China in coming weeks, but was not sure if the Chinese government will negotiate anything on the issues of intellectual property theft, government manipulation of markets and other state intervention that particularly irk the U.S. and most western countries including Canada.

She said she intends to work closely with “like-minded” nations to bolster the strength of the rules-following world trading order.

The U.S.-China trading relationship has been fraught for years, after more than a decade of hope and optimism that China’s joining of the World Trade Organization would lead it toward more rules-based trade policies and a more liberal political order.

“The path we have been on did not take us there,” said Tai, noting a “zero sum dynamic where China’s growth and prosperity come at the expense of workers and economic opportunity here in the U.S. and other democratic-based economies.”

Instead of more openness and mutually beneficial integration, western nations have seen their companies discriminated against in Chinese markets, their intellectual property extorted from them in the hopes of ongoing market access, and increasing government market manipulation by the Chinese government.

While already souring during the latter years of former U.S. President Barack Obama’s administration, the relationship broke down into trade war during the Trump term, with Chinese government intransigence met by increasingly hostile U.S. government rhetoric and eventually tariffs on a wide range of Chinese goods. The U.S. also placed regulatory and financial constraints on many Chinese companies, and promoted the banning of Huawei equipment from western telecommunications systems.

At the same time, China demonstrated its unwillingness to respect rules-following trade norms by banning certain Australian and Canadian products, including most Canadian canola and pork, due to diplomatic disputes.

The hostage diplomacy that saw Canadian and other foreign nationals jailed seemingly as a result of diplomatic disputes has also raised the ire of rules-following trading nations.

That has all created a fertile bed for the seeds of co-operation between the U.S., the European Union and other rules-based trading countries like Canada. Tai said recent talks with the EU have seen the two major trade players operate in a less combative manner than in recent years.

Tai said she hoped to see the WTO revived and improved.

She also said the U.S. will demand compliance with the current Phase One provisions, with China so far failing to meet all of them. But she seemed to acknowledge the deal doesn’t deal with any of the U.S.’s deeper concerns. Future U.S. demands will involve fundamental issues.

Tai said the Phase One arrangement and other recent deals have focused on securing market access and are causing U.S. policy makers to rethink their approach.

“Is what we’re looking for more liberalized trade and just more trade, or are we looking for smarter and more resilient trade?”