Business Groups Push Biden Administration on China Trade Policies

In a letter to Treasury Secretary Janet Yellen and U.S. Trade Representative Katherine Tai, a number of leading U.S. business groups outlined their priorities on China-related trade issues. They focused on three key issues: 1) Implementation of the Phase One agreement; 2) adjusting the tariffs arising from the recent trade war; and 3) continued engagement with China on trade issues.

With regard to the Phase One agreement, in broad terms, the letter pushes for "full implementation." More specifically, it "urge[s] the Administration to work with the Chinese government to increase purchases of U.S. goods through the remainder of 2021 and implement all structural commitments of the Agreement before its two-year anniversary on February 15, 2022." It notes that "[t]he Chinese government has met important benchmarks and commitments made in the agreement that benefit American businesses, farmers, ranchers, and workers," but says "there is more work to be done by both governments to ensure that China meets its existing purchase commitments, including purchases of American ethanol." In this regard, it points in particular to the need to "ensure that China fully implements outstanding structural commitments, particularly in the areas of biotechnology, patent linkage, services (including financial services), and protection of intellectual property rights." It asks Yellen and Tai "to redouble efforts with China to meet Phase One purchase and structural commitments."

On tariffs, the letter calls for "swift action to address the costly and burdensome tariffs and retaliatory tariffs." In particular, it "urge[s] the Administration to retroactively restore product exclusions that expired in 2020"; to "reinstate a new, fair, and transparent tariff exclusion process"; and to "continue negotiations with China to remove both nations’ counterproductive tariffs as soon as possible." It explains that these tariffs have caused "significant and ongoing harm to the U.S. economy, U.S. workers, and U.S. national competitiveness," as U.S. industries "face increased costs to manufacture products and provide services domestically, making their exports of these products and services less competitive abroad." It also points out that tariff reductions will "relieve increasing inflationary pressures and rising prices for all Americans." And in an effort to use terms that will appeal to the Biden administration, the letter notes that "[a] worker-centered trade agenda should account for the costs that U.S. and Chinese tariffs impose on Americans here at home and remove tariffs that harm U.S. interests." It concludes by asking Yellen and Tai to "restart a tariff exclusion process to mitigate damage to U.S. workers and other stakeholders."

Finally, on the next steps for engagement, the letter sets out a number of specific areas for work. It points out that the existing commitments "did not include some of the most competitive U.S. goods exports to China, such as US lumber and chemical industry exports." And it says that many "[l]ongstanding issues remain unaddressed, including state subsidies; procurement by government and state-owned enterprises; cybersecurity, digital trade, and data governance; services issues; competition policy; regulatory data protection for new drugs, biological products, and other items; Chinese domestic standards-setting; outstanding agriculture policy issues; and continued market access barriers for U.S.-manufactured goods." It concludes by asking Yellen and Tai to "increase broader economic and trade engagement to address structural concerns that will further open China’s market and level the playing field for U.S. goods and services."

Some of the key signatories to the letter were: The US-China Business Council; the U.S. Chamber of Commerce; the National Foreign Trade Council; and a wide range of trade associations representing specific sectors.

The Biden administration has not given many signals as to how it will approach China trade issues, other than to say that existing policies are under review. Several news reports noted the following statement from a USTR spokesperson in response to the letter: "As we make historic infrastructure investments and Build Back Better, we are conducting a robust, strategic review of our economic relationship with China to create effective policy that delivers results for American workers, farmers and businesses and puts them in a stronger position to compete with China and the rest of the world." However, details of this review have not been forthcoming.