In One Sentence

• U.S. Secretary of Commerce Gina Raimondo and China’s Minister of Commerce Wang Wentao held a “candid” and “constructive” conversation about U.S.-China economic, trade and investment relations.
• U.S. Trade Representative Katherine Tai also met with Wang on the margins of the Asia-Pacific Economic Cooperation (APEC) ministerial meeting. 
• After China banned key infrastructure operators from buying Micron products for “serious network security risks,” U.S. officials and lawmakers criticized the move as “economic coercion.”
• Responding to a Group of Seven (G7) statement criticizing China’s “economic coercion,” China said that the United States’ “unilateral sanctions” and “acts of ‘decoupling’” made it “the real coercer,” urging the G7 not to become an “accomplice.”
• The U.S. and Taiwan have concluded negotiations on their U.S.-Taiwan Initiative on 21st Century Trade, covering issues such as trade facilitation, service regulation, and small and medium-sized enterprises.

Mark the Essentials

• According to official statements, U.S. Secretary of Commerce Gina Raimondo Raimondo “raised concerns” about China’s “recent spate of…actions taken against U.S. companies,” while China’s Minister of Commerce Wang Wentao “expressed pressing concerns” on U.S. “semiconductor policy, export controls and foreign investment review” policy towards China.
• As part of the reform discussions to get the World Trade Organization (WTO) out of its current impasse, China has suggested that the WTO Secretariat should take the lead in identifying easily implementable reform proposals and have the discretion to “take steps on the improvements” if they are within the Secretariat’s mandate and capabilities. This would be a step further from the U.S. position, which has largely focused on procedural changes to increase WTO efficiency and has repeatedly voiced concerns about the “overreach” of other WTO branches (e.g., the WTO’s dispute settlement system). 
• After the U.S. said that it had concluded negotiations on the U.S.-Taiwan Initiative on 21st Century Trade, Taipei said that an agreement under the  initiative would be “the most comprehensive trade agreement signed between Taiwan and the United States since 1979” and would function as a “building block” for a “Taiwan-U.S. free trade agreement.” China has “deplored” and “strongly opposed” the U.S.-Taiwan Initiative as a “grave violation” of the One China principle and U.S. commitments to maintain only unofficial relations with Taiwan, holding that the negotiating or signing of an agreement “with implications of sovereignty” sends “wrong messages to separatist forces seeking ‘Taiwan independence’.”
• U.S. President Joe Biden vetoed a bill to maintain a 2-year tariff suspension on solar panels from Southeast Asian countries, whose companies are allegedly helping Chinese manufacturers circumvent U.S. antidumping duties against China. According to Biden, the United States has been “reliant” on Chinese solar panels “for too long,” and a 24-month “bridge” would support the American solar industry as the Biden administration’s laws and executive actions eventually improve solar panel manufacturing capabilities in the U.S.
• As the Office of the U.S. Trade Representative (USTR) continued its statutory review of Section 301 tariffs on Chinese goods, USTR recently decided to again extend the exclusion of Section 301 tariffs on dozens of COVID-related medical products from China, stating that the extension is “not likely to adversely harm [relevant] domestic manufacturing.”

Keeping an Eye On…

• Almost 900 days since the Biden administration was sworn into office and more than 600 days after she laid out a “new approach to the U.S.-China trade relationship”, USTR Katherine Tai finally met in-person with her Chinese counterpart Wang Wentao on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting in Detroit. In her “new approach” on China remarks of October 2021- probably better described as “no approach” on China–USTR Tai had made two overarching points. First, that trade and tariff policy was a component of the administration’s broader worker-focused agenda, and trade policy will be taking a relative backseat until the administration’s infrastructure-building, competitiveness, and worker training agenda had been put into motion. For the most part, that infrastructure and worker-focused agenda has been put into motion. Second, that the U.S. was not seeking to decouple from China but would rather insist on reframing the terms of its ‘recoupling’. Those terms of ‘recoupling’ have been awfully slow to arrive. Be it a successor to the Phase One trade agreement–let alone negotiate a Phase Two ‘structural’ issues deal, readjustment of the Section 301 tariffs, or even drawing up the architecture of USTR’s engagement with its Chinese counterparts, there has been practically no movement forward. In the interim, a WTO dispute settlement panel has found the Section 301 tariffs to be in violation of international trade law. Indeed, truth be told, the terms of that ‘recoupling’ on the trade policy front may never fully arrive in earnest during this Biden term. At this time, a second phase of review of the Section 301 tariffs is glacially underway, with almost 1,500 stakeholders having submitted comments by the January 2023 deadline (300 of those comments were either exact duplicates or entirely empty!). USTR is presumably sifting through the comments at leisure, and it is highly unlikely that there will be any significant readjustment of these China tariffs (some tariff exclusions could be widened though) at this late stage in the administration’s term of office. Which, in turn, means that while USTR will try to sort out minor trade irritants with the Chinese side in the time ahead, not much more can be expected on this U.S-China trade policy front until a new president arrives in 2025 or Mr. Biden is reelected. There will no doubt be ‘candid and constructive’ discussions between the two sides during the interim, but little to show by way of actual delivery. 

Expanded Reading

• Chinese Commerce Minister Meets with US Commerce Secretary, Embassy of the People’s Republic of China in the United States of America, May 28, 2023
• US ‘Won’t Tolerate’ China’s Micron Chips Ban, Raimondo Says, Bloomberg, May 27, 2023
• U.S., China’s top commerce officials meet to discuss trade concerns, CNBC, May 26, 2023
• Readout of Ambassador Katherine Tai’s Meeting with Minister of Commerce of the People’s Republic of China Wang Wentao, Office of the United States Trade Representative, May 26, 2023
• Readout of Secretary Raimondo’s Meeting with Ministry of Commerce Minister Wang Wentao, U.S. Department of Commerce, May 25, 2023
• U.S., Chinese commerce chiefs raise complaints on trade, investment, export policies, Reuters, May 25, 2023
• G7 Hiroshima Leaders’ Communiqué, The White House, May 20, 2023
• Foreign Ministry Spokesperson’s Remarks on G7 Hiroshima Summit’s Hyping up of China-related Issues, Ministry of Foreign Affairs of the People’s Republic of China, May 20, 2023
• Foreign Ministry Spokesperson Wang Wenbin’s Regular Press Conference on May 19, 2023, Ministry of Foreign Affairs of the People’s Republic of China, May 19, 2023
• USTR Announcement Regarding U.S.-Taiwan Trade Initiative, Office of the United States Trade Representative, May 18, 2023