China has failed to meet its commitments under a two-year phase-one trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, Deputy U.S. Trade Representative (USTR) Sarah Bianchi said. “You know, it is really clear that the Chinese haven’t met their commitment in phase one. That’s something we’re trying to address,” Bianchi told a virtual forum hosted by the Washington International Trade Association. In the deal signed by former President Donald Trump in January 2020, China pledged to increase purchases of U.S. farm and manufactured goods, energy and services by USD200 billion above 2017 levels during 2020 and 2021. Through November, China had met only about 60% of that goal, according to trade data compiled by the Peterson Institute for International Economics Senior Fellow Chad Bown. The deal prevented the escalation of a nearly three-year trade war between the world’s two largest economies, but left in place tariffs on hundreds of billions of dollars of imports on both sides of the Pacific.
Agriculture Secretary Tom Vilsack in late January told lawmakers that China’s purchases of U.S. farm goods fell short of the phase one goal by around USD13 billion. The U.S. Census Bureau is expected to release final 2021 trade data for goods and services this week, which will provide specifics on the shortfall. Chinese customs data showed the country’s 2021 trade surplus with the United States surged by 25% to USD396.6 billion after declining for two straight years, with exports to the U.S. up by 27% and imports of American goods rising by 33%.
China’s Embassy in Washington said Beijing has worked to implement the phase one agreement “despite the impact of Covid-19, global recession and supply chain disruptions”. “We hope the U.S. can create a sound atmosphere and conditions for expanded trade with China. The two trade teams are in normal communication,” the Embassy said in an emailed statement. Bianchi, whose portfolio includes China and Asian trade matters, did not identify steps the Biden Administration is taking to hold China to its phase one commitments, which also include increased Chinese market access for U.S. agriculture, biotechnology and financial services. “It’s not our goal to escalate here. But certainly we’re looking at all the tools we have in our toolbox to make sure they’re held accountable,” Bianchi said, without providing details.
Trade Representative Bianchi, who served as an economic adviser in the Obama Administration and took office in October, said the U.S. was trying to foster a “stable relationship” with China, but the two countries are at a “difficult stage in the relationship”. “To be super-candid, the conversations are not easy. They’re very difficult. But you know, from my perspective, what’s important is that we’re having conversations and they will be unflinchingly honest,” Bianchi said. She said the USTR was emphasizing that China’s state aid to companies and non-market economic policies and practices are a “serious threat to American economic interests.” Bianchi said USTR was consulting closely with the U.S. Congress on the Biden Administration’s planned Indo-Pacific Economic Framework to re-engage economically with the rest of Asia, and more details would be released in the coming weeks. The framework will not include improved market access for countries that sign up, Bianchi said, but the U.S. will be seeking high-standard “binding commitments” from trading partners in negotiations on digital trade policies, labor rules, environmental standards and supply chain resilience, the South China Morning Post reports.
U.S. President Joe Biden has extended by four more years tariffs imposed by former President Donald Trump on most solar panels imported from China and other countries, but excluded tariffs on so-called bifacial solar panels that can generate electricity on both sides and are now used in many large solar projects. This “will enable us to rebuild a sustainable, competitive, and technologically-advanced domestic solar industry”, Biden said. Tariffs will be set at 14.75% and gradually be reduced to 14%. Since the tariffs were imposed, solar-panel production in the U.S. has tripled. Chinese and South Korean companies have set up factories in Georgia, Florida and Alabama, and an American firm, First Solar, expanded domestic production at a plant in Ohio.
Biden also doubled an import quota on solar cells to 5 gigawatt, allowing for more cells to be imported. The U.S. does not currently produce solar cells, and the Administration wants to make sure domestic suppliers “do not have to pay a tariff on a key input for their manufacturing process”, a Senior Administration Official said. The cells come from countries like Vietnam or Malaysia – not China, the official said. “There is no reason to think that making the import quota larger will somehow help China,” the official added, as reported by the South China Morning Post.
