Trade defense

U.S. must ramp up trade defense against China

The remarks provide a noticeable shift in tone from Biden’s top trade ambassador but stop short of outlining any new trade penalties against the country.

By STEVEN OVERLY

China has not bowed to pressure to fulfill its obligations under a Trump-era trade agreement, and the Biden administration must now more directly confront the harmful effects of Beijing’s economic behaviors, U.S. Trade Representative Katherine Tai will tell lawmakers on Wednesday.

In her testimony before the House Ways and Means Committee, Tai signals that a good-faith effort to engage with China’s government on trade may be hitting its limits. The remarks provide a noticeable shift in tone from Biden’s top trade ambassador but stop short of outlining any new trade penalties against the People’s Republic of China. Instead, Tai will reiterate that existing tools aren’t up to the task.

“Our strategy must expand beyond only pressing China for change and include vigorously defending our values and economic interests from the negative impacts of the PRC’s unfair economic policies and practices,” Tai will say, per prepared remarks.

Tai initiated talks with her Chinese counterpart, Vice Premier Liu He, in October after pledging that the Biden administration would hold Beijing accountable for its commitment to purchase $200 billion worth of additional American goods over a two-year period under former President Donald Trump’s Phase One agreement.

Data show China fell short of that obligation, which it was expected to meet by the end of last year. Tai will tell the committee that her talks have revealed that Beijing “would only comply with those trade obligations that fit its own interests.”

“This is a familiar pattern with the PRC – from their actions at the [World Trade Organization] and in various bilateral high-level dialogues,” Tai will add. “The United States has repeatedly sought and obtained commitments from China, only to find that follow-through or real change remains elusive.”

The door remains open to further conversations, Tai will say, while calling for the U.S. to both challenge Beijing’s practices and bolster American competitors through domestic investments.

China is hustling to gain global dominance over critical technologies, such as electric vehicles, batteries and semiconductors. In the past, U.S. competitors have suffered from Beijing’s industrial subsidies and other market-distorting actions, which existing trade remedies were “too slow or ill-suited to effectively address,” Tai argues in her testimony.

“To ensure that our industries remain competitive, we must develop new domestic tools targeted at defending our economic interests, and make strategic investments in our economy,” Tai will say.

She will call on Congress to approve $52 billion for domestic semiconductor production and research through legislation now known as the Bipartisan Innovation Act. The House and Senate are currently preparing to launch a conference committee to reconcile competing versions of that bill.