US trade official says China failed to meet ‘Phase 1’ commitments

Chinese and American flags fly in front of a corporate building in Shanghai, China November 16, 2021. REUTERS/Aly Song

WASHINGTON, Feb 1 (Reuters) – China has failed to meet its commitments under a two-year “Phase 1” trade deal that expired at the end of 2021, and talks continue with Beijing over the matter, said Sarah Bianchi, Deputy US Trade Representative. said Tuesday.

“You know, it’s really clear that the Chinese haven’t fulfilled their commitment in phase 1. That’s something we’re trying to resolve,” Bianchi said during a virtual forum hosted by the Washington International Trade. Association.

In the agreement signed by former President Donald Trump in January 2020, China pledged to increase its purchases of US agricultural and manufactured goods, energy and services by $200 billion from 2017 levels. in 2020 and 2021.

Until November, China had only reached about 60% of this target, according to business data compiled by Chad Bown, Senior Fellow at the Peterson Institute for International Economics.

The deal prevented the escalation of a nearly three-year trade war between the world’s two largest economies, but left tariffs in place on hundreds of billions of dollars of imports from both sides of the world. Peaceful.

In late January, Agriculture Secretary Tom Vilsack told lawmakers that China’s purchases of U.S. agricultural products were about $13 billion short of the Phase 1 target.

The US Census Bureau is expected to release final 2021 trade data for goods and services on February 8, which will provide details on the shortfall.

Chinese customs data showed the country’s trade surplus with the United States in 2021 jumped 25% to $396.6 billion after declining for two consecutive years, with exports to the United States up 27% and imports of US goods up 33%.

A spokesperson for the Chinese Embassy in Washington said Beijing has been working to implement the Phase 1 deal “despite the impact of COVID-19, the global recession and supply chain disruptions. ‘supply”.

“We hope the United States can create a healthy atmosphere and conditions for expanded trade with China. The two trade teams are in normal communication,” the spokesperson said in an emailed statement.

STEADY RELATIONSHIP

Bianchi, whose portfolio includes China and Asian trade issues, did not identify the steps taken by the Biden administration to hold China to its Phase 1 commitments, which also include increased access to the Chinese market for agriculture, biotechnology and US financial services.

“It’s not our goal to escalate here. But we certainly review all the tools we have in our toolbox to make sure they’re held accountable,” Bianchi said, without providing details.

Bianchi, who served as an economic adviser in the Obama administration and took office in October, said the United States was trying to foster a “stable relationship” with China, but the two countries were at a “stage difficult of the relationship”.

“To be super frank, the conversations are not easy. They are very difficult. But you know, from my point of view, what is important is that we have conversations and that they are honest flawless,” Bianchi said.

She said the USTR highlighted China’s state aid to businesses and non-market economic policies and practices as a “serious threat to U.S. economic interests.”

Bianchi said the USTR was consulting closely with Congress on the Biden administration’s planned Indo-Pacific economic framework for re-engaging 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 said the United States would seek high-level “binding commitments” from trading partners in negotiations on digital trade policies, labor rules, environmental standards and supply chain. resilience.

Reporting by David Lawder and Andrea Shalal; edited by Barbara Lewis, Leslie Adler and Lincoln Feast.

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