Businesses Force Biden to Develop China Trade Policy

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WASHINGTON — More than seven months since the Biden administration, American businesses are increasingly disappointed with the White House’s approach to China, the confrontational policies imposed during the Trump era are still in place, and President Biden has little to say about the world’s economic engagement. It says it provides clarity. second largest economy.

The relationship between the two economic superpowers is deeply fragmented. American import duties are still applied to approximately $360 billion worth of Chinese goods, and the exemptions that protect more than 2,000 products from these tariffs are almost all gone. A series of export controls and bans are still in place, putting US tech giants like Qualcomm, Intel and Google in a difficult position on how to approach the Chinese market and offering little hope that the divergence of the world’s two largest economies will be reversed any time. soon.

To the dismay of some American business leaders, Mr. Biden has reinforced some of the punitive actions of the Trump administration. Biden administration in July Expanded the list of Chinese officials They are under US sanctions for their role in undermining Hong Kong’s democratic institutions. president in June issued an executive order Adding more Chinese companies to the ban on American investments in Chinese firms with links to the country’s military or selling surveillance technology used to suppress dissident or religious minorities.

Still, Mr. Biden and his senior advisers have yet to reveal how they view economic relations with Beijing, saying they will reveal the administration’s approach once a comprehensive review of China’s trade policy is complete. But the review dragged on for months with no public timeline for its conclusion.

As a result, businesses are lobbying heavily for tariff removal, which will make it easier for them to rely on factories in China rather than investing in the US or elsewhere. And they want assurance that they can do business with a financially important market.

“The lack of concrete Chinese economic policy has been disappointing to the business community,” said Charles Freeman, Senior Vice President for Asia at the US Chamber of Commerce. “It’s not like this crowd came without any experience or prejudice about China.”

The future of the US trade relationship with China is one of the biggest global economic questions facing Mr. Biden and his advisers. China has thrown huge resources behind its economic ambitions and plans to dominate cutting-edge industries like artificial intelligence and robotics by providing government subsidies to Chinese firms and using other tactics, including espionage. While the Trump administration signed an initial trade deal with China that included purchase commitments for agriculture and other commodities, the deal failed to address a number of key concerns, including China’s state-owned businesses and industrial subsidies.

During his White House nomination, Mr. Biden attacked President Donald J. Trump on the trade war and promised to deploy allies to counter China on trade practices. Mr. Biden since he took office settled a longstanding trade dispute He met with the European Union and convinced the European authorities. adopting a more assertive trade policy towards China this year. And he laid out his infrastructure plan as a way to counter Beijing, saying it would “put it in a position to win global competition with China in the coming years.”

But the administration has said little about whether it wants to restart economic negotiations and resolve outstanding issues, including tariffs. At times, officials have offered somewhat conflicting views.

Secretary of the Treasury Janet L. Yellen He told The New York Times He warned this summer that tariffs are hurting American consumers, but that China’s subsidies to exporters pose a challenge for the United States. Katherine Tai, the United States trade representative, defined the tariffs as follows: provide leverage.

Business impatience with management’s approach is growing. Corporate leaders say American companies need clarity on whether they can do business with China, one of the largest and fastest growing markets. Business groups say their members are competitively disadvantaged by tariffs that drive up costs for American importers.

“We must do everything we can to increase China’s use and dependence on American technology products,” Intel CEO Patrick Gelsinger said in an interview last week. “They are struggling to establish a framework for how they have a policy-driven engagement with China,” the administration said.

To me it’s time to get into the real business of having a real trade relations policy and engagement with China around trade exports and technology.”

In early August, a group of influential US business groups sent a letter She urged Ms. Yellen and Ms. Tai to restart trade talks with China and lower tariffs on imported Chinese goods.

“The fundamental dilemma that companies are facing right now is just uncertainty,” said Craig Allen, chairman of the US-China Business Council, which organized the letter. “Will the tariffs stay in place? Are they in place forever? What is the procedure for requesting exemption from tariffs? Nobody knows.”

Mr. Allen said his group edited the letter because the Biden administration wanted to make sure that the views of businesses, as well as labor and environmental groups, would be taken into account during the China review.

“Many find it ironic that the Biden administration has followed so closely the Trump administration’s playbook on China,” he said.

Other organizations are signed the letter It included groups representing sectors of the economy with close trade ties to China, such as the US Chamber of Commerce and the Business Roundtable, as well as the American Pharmaceutical Research and Manufacturers Association, the Semiconductor Industry Association, and the American Farm Bureau Federation.

“We are currently dealing with all these other supply chain disruption issues that are costing companies millions of dollars,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. Industry that has become heavily dependent on imports from China. “Putting tariffs on that is difficult for planning purposes.”

On Tuesday, the National Manufacturers Association sent a letter Biden urged his administration to “act as quickly as possible to finalize and announce” a Chinese strategy.

Businesses of all sizes expect Mr. Biden to change direction from Mr. Trump’s trade policies. Arnold Kamler, CEO of bicycle wholesaler and manufacturer Kent International, said the 25 percent tariffs on bicycle imports from China put a huge strain on his business’s cash flow, forcing him to borrow more from his bank. It has been passing the cost of additional import duties on to retailers for the past two years.

“To be honest, we were hopeful that the Biden administration would realize that the trade war is not working,” Kamler said.

Adding to the impatience is that the vast majority of exemptions to China tariffs granted under the Trump administration have expired, and the Biden administration has not established a process to allow companies to seek new exceptions.

Lawmakers from both sides wrote a letter to the Biden administration urging it to restart the exclusion process, and the Senate included a provision to create and reinstate a process for issuing new exclusions as part of a deal. legislative package To increase competitiveness with China last June. According to a Democratic aide in the House of Representatives, the Senate provision has been met with resistance in the House, so the two houses may disagree on whether to consider tariff exemptions as part of the final China package.

Robert E. Lighthizer, Mr. Trump’s trade representative and negotiator of the trade deal with China, said in an interview that lobbyists are trying to weaken the executive branch’s power to enforce tariffs.

“People working for China and Chinese importers want to get rid of the last tool that Biden and subsequent presidents will have to deal with China’s unfair trade practices,” said Lighthizer.

Business groups are not in favor of removing tariffs. The National Council of Textile Organizations, which represents the American textile industry, wants the administration to maintain tariffs on apparel and home textile products from China.

“We were pretty strong in our message to management, saying please continue this approach to toughening up against China,” said Kimberly Glas, president and CEO of the textile group.

Any decision to roll back tariffs could have domestic political ramifications in the United States, where a hardline mindset against China permeates both major parties. Any move by the Biden administration to roll back Trump-era policies towards Beijing could be seized on by political dissidents trying to portray Mr. Biden as tough enough on China at a time when the country is preoccupied with a crisis. rapid military buildup.

Scott Paul, president of the American Manufacturing Alliance, a trade group representing the United Steelworkers and some domestic manufacturers, noted that the concern about China, on both economic and national security grounds, is “one of the few issues that unites Democrats and Republicans on these issues. days.”

“Removing tariffs has no advantage for Joe Biden,” he said. “At a time when you are trying to increase US capacity in key industries, it invites a flood of Chinese imports to suffocate it.”

The Biden administration has said little about its tariff plans or how it will handle China’s failure to meet its commitments under the Trump trade deal. According to Chad P. Bown, a senior fellow at the Peterson Institute for International Economics, China has not fulfilled its purchase commitments. Followed by China’s purchases from US goods. However, Chinese economists claim that Beijing is sincere in keeping its promises and that the pandemic has affected demand in China.

When asked about the administration’s review of China’s trade policy, Ms. Tai replied that she was aware that “time is of the essence.” However, he declined to provide a preview of the steps management might want to take.

“As for how we should approach this business relationship, we need to approach it through negotiation,” Ms. Tai said at a virtual event last week.

Keith Bradsher contributing reporting.

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