U.S. To Push China Trade Agreements, May Reopen Tariff Exclusion Process

The Biden Administration plans to hold China accountable to trade agreements it reached with the previous administration. U.S. Trade Representative (USTR) Katherine Tai will be meeting with her Chinese counterpart in the coming days and said Monday that part of the conversation will be China’s performance under the Phase One Agreement, which went into effect in February 2020.

Speaking at the Center for Strategic and International Studies on the administration’s approach to the U.S.-China bilateral trade relationship, Ambassador Tai noted that the Phase One Agreement included a set of commitments that cover China’s obligations regarding intellectual property and technology transfer, purchases of American products, and improved market access for the agriculture and financial services sectors.

Tai noted that China made commitments under the Phase One Agreement that benefit certain American industries, including agriculture, that they will enforce. However, she said, “It has stabilized the market, especially for U.S. agricultural exports. But our analysis indicates that while commitments in certain areas have been met, and certain business interests have seen benefits, there have been shortfalls in others.”

In the deal, China had agreed to buy an additional $200 billion in U.S. goods and services over a two-year period. However, the Peterson Institute for International Economics noted in February that China had only met 62 percent of its commitment on a pro-rated basis.

Part of the administration’s plan to align its trade policies toward China around its priorities including restarting its targeted tariff exclusions process to mitigate the effects of certain Section 301 tariffs. Tai said, “We will ensure that the existing enforcement structure optimally serves our economic interests. We will keep open the potential for additional exclusion processes, as warranted.”

The tariff exclusion process enabled interested parties—including law firms and trade associations—to petition for an exemption from the Section 301 tariff increases for specific imports. Last month, the Congressional Research Service published that the USTR is reportedly reviewing all actions related to the Section 301 investigation, including decisions on whether and how to accept new exclusion requests.