China is hoping for a reset in relations with the incoming Biden administration. President-elect Biden has nominated an experienced China trade negotiator, Katherine Tai, as the next USTR. But a major reset isn’t expected soon as the Beijing regime continues suppressing its private sector.
The weekly trade report with L.C.
President-elect Joe Biden’s designee as next US Trade Representative isn’t going to have an easy job of it, assuming she will be confirmed. Chinese Foreign Minister Wang Yi, in scolding tones, gave a video address to the US-China Business Council on December 7th in which he called for a reset in US-China relations and greater bilateral cooperation under the incoming US administration. But on the same day Wang Yi was scolding the US business community, the US ratcheted up sanctions on Chinese officials linked to abuses in Hong Kong.
Beijing reacted with angry statements and copy-cat sanctions against some US government officials, including congressmen and NGO personnel. The US sanctions were in response to Beijing’s ouster of opposition legislators in Hong Kong and the involvement of the 14 individuals in “developing… and implementing” the Hong Kong national security law. They were penalized with asset freezes and visa denials.
American Chamber of Commerce in China flouted
In another annoying gesture, China selected Politburo member Wang Chen – one of the 14 sanctioned individuals – to represent it at the December 10th annual dinner in Beijing of the American Chamber of Commerce in China. A Foreign Ministry spokesperson claimed that Wang Chen was invited by the Chamber. The Chamber couldn’t afford to make life harder for its member companies operating in China by disinviting Wang Chen, but it will likely face blow-back in the US for allowing the sanctioned communist to speak.
The Chinese Foreign Ministry spokesperson, true to the preferred wolf-warrior idiom practiced by that Ministry, claimed that “This just shows that the so-called sanctions by the US are unpopular and will not be supported by all sectors of the US.”
No immediate reset likely
But the incoming president’s advisers and appointees, at least initially, are more likely to retain the hawkish stance of their predecessors rather than reset relations as the Chinese Foreign Minister proposed. With the Xi regime moving ahead with plans to strengthen central planning and assert ever more CCP control over the private sector, Beijing will find less and less sympathy in Washington and other allied capitals.
On December 8th the House passed a bipartisan bill for refugees from Hong Kong who fear persecution and prosecution for their participation in Hong Kong’s pro-democracy protests. The Hong Kong People’s Freedom and Choice Act passed with no dissent. If enacted, it will establish a five-year window for activists to apply to live and work in the US. Hong Kong citizens already in the US who fear persecution back home would be able to stay. Applicants for refugee status from Hong Kong would be excluded from the annual US cap on refugee admissions.
Katherine Tai nominated for important USTR post
Meanwhile, president-elect Joe Biden has nominated Katherine Tai to be the US Trade Representative. Tai, 45, is highly experienced and well-known to the major players on trade policy in Washington. She served as associate general counsel to the USTR and was the Obama administration’s chief China enforcement officer from 2011-14. Since 2014 she has been chief trade counsel on the House Ways & Means Committee. She speaks Mandarin and has extensive experience at USTR dealing with China in trade negotiations and litigating successful WTO cases against China. Prior to joining USTR, Tai worked briefly at private law firms. She also lived and taught English in China.
From her position at Ways & Means, Tai was a lead figure in getting the changes to the USMCA that House Democrats demanded in return for approval of the trade pact. These toughened labor and environmental provisions, and the agreement was easily passed by the House. Her ties to legislators should help if there are new trade agreements to ratify — and more immediately if the new president decides to seek renewal of presidential Trade Promotion Authority, which expires on July 1st.
Tai’s WTO negotiating successes
Tai has been credited with organizing broad support from other countries for the WTO cases the US brought against China. This includes the case that that was brought against China’s restrictions on rare earth exports. It was joined by Japan and the EU and supported by many other countries. Other US cases won against China at the WTO while Tai was USTR chief counsel for China enforcement include the complaints against China’s duties on cars, poultry, grain-oriented electrical steel [sic], and restrictions on its electronic payments system.
It is assumed that her ethnicity – her parents were born in China, grew up in Taiwan, and immigrated to the US in the 1960s – helped her because the president-elect was under pressure to appoint more Asians. But she was also the top choice of many in Congress and the private sector based on her experience.
AFL-CIO supports Tai’s selection
AFL-CIO President Richard Trumka calls her a “worker champion.” In addition to promoting Biden’s Buy American re-shoring and pro-worker/manufacturing policies, she appears well positioned to carry out Biden’s trade goals of working closely with allied countries, ditching the Trump administration’s hostility to the WTO, and maintaining a hard line toward China’s abuses.
Mrs. Tai should work well with Biden’s national security team. But when there are disagreements, Tai won’t have the standing within the administration to prevail over the foreign affairs officials. This is because her background is in staff positions, not as an elected or senior official in a previous government. Nor does she share the long-time closeness to Biden enjoyed by incoming Secretary of State Antony Blinken, National Security Adviser Jake Sullivan, and Treasury Secretary-designate Janet Yellen. Nevertheless, Tai’s deep knowledge of China and her experience negotiating with Beijing could give her considerable influence on China policy even if her clout can’t match that of Biden’s foreign policy advisers in other areas.
Reducing the China dependency
The Wall Street Journal suggests that Tai “argued internally that the US could use subsidies and incentives” to overcome “over-dependence on Chinese imports” and “suggested that the US and allies could agree to buy… protective equipment from one another rather than China,” providing domestic manufacturers a guaranteed market though it could mean higher costs.
Who is chosen as ambassador to China will also be relevant to China policy. Pete Buttigieg is currently thought a likely pick. The USTR also carries the rank of ambassador and is a cabinet-level position.
The Obama administration made mistakes in its China policy, the most serious of which was letting China establish military bases on artificial islands in the South China Sea. As USTR following this Obama-Biden security debacle, Mrs. Lee will have a difficult job negotiating trade deals that benefit the US in the face of expected resistance from Chairman Xi, Foreign Minister Wang Yi, and their Politburo pals.
L.C. reports on trade matters for business as well as Founders Broadsheet.
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