US, China To Hold First Bilateral ‘Phase One’ Trade Deal Talks Since Biden’s Inauguration

Beijing has repeatedly expressed its frustration with President Biden’s reluctance to reconsider tariffs slapped on Chinese goods first imposed by President Trump. But after the first meeting between top US and Chinese diplomats in Alaska earlier this year, US trade rep Katherine Tai is reportedly expected to hold the first talks with her Chinese counterpart about a new trade deal.

According to Hong Kong-based English-language newspaper SCMP, Tai and her Chinese counterparts are set to review the phase one trade deal in the coming weeks.

“The talks at the principal level may come soon. Both sides need to review the progress of the deal and put not he table the divergence and conflicts,” one source said.

So far, Tai, who was sworn in on March 18, has held more than 20 virtual meetings with her counterparts from various countries, but not China.

The last time the two biggest economies discussed the phase one deal was in August last year, even though the deal stipulates that senior level consultations must take place every six months.

Tai said on Wednesday that she expects to engage “in the near term” with the Chinese side, led by vice-premier Liu He, to assess the implementation of the trade deal.

“It is our responsibility in the Biden-Harris administration to carry forward the relationship, where we do not shy away from being tough, but where we also know we must be fair and must be future focus-oriented,” she told an online event hosted by the Financial Times.

The Biden White House has held talks with China on climate change, diplomacy and other strategic topics since March, despite lingering tensions over Beijing’s aggressive maneuvers in the South China Sea.

Tai said last week that her office has yet to start a comprehensive review of US trade policy toward China, but she would closely monitor how China follows through on its commitments. China agreed to increase imports from the US by at least US$200 billion over the two years covered by the deal in exchange for the removal of tariffs on its exports to US, but actual purchases have fallen behind, partly due to the coronavirus pandemic.

Data released earlier this week showed that the trade deficit between the world’s two largest economies has actually widened in China’s favor in March, even as bilateral trade has spiked. Beijing has repeatedly urged the US to roll back its punitive tariffs on Chinese products and called on the American business community to push Washington to remove the tariffs. But US officials, including Tai, have said the tariffs will remain in place for now. Some mostly pro-Beijing analysts have said the purchase targets in the phase one deal are unrealistically high and expect the deal to disappear over time.

Despite softening on other measures, the Biden Administration has continued to add Chinese firms connected to the country’s military to a trade blacklist, as President Trump’s hard-line stance on China remains politically popular in the US.