In One Sentence

• The Office of the USTR has a new Strategic Plan, its first since 2013.
• House Republicans urged the Biden administration to more strictly enforce the phase-one trade deal and seek “damages” for failed commitments. 
• USTR Katherine Tai observed that trade talks with China over Beijing’s failed purchase commitments have gotten “more difficult over time.”
• Chinese solar suppliers have established separate production lines free from forced labor concerns for U.S.-bound goods.

Mark the Essentials

• Despite containing multiple mentions of China, the USTR’s new Strategic Plan provides little new information about the Office’s overall China policy. 
• Led by House Minority Leader Kevin McCarthy, Republican lawmakers also asked whether the administration plans to negotiate a new and “fully enforceable” trade deal with China. 
• According to USTR Tai, conversations are increasingly focused on building resilience and trust in the global economy, as well as calling China to join these efforts and “play by our rules.”
• According to industry analysts, China’s domestic demand would be “almost” sufficient to consume all of the polysilicon produced in the Xinjiang region.

Keeping an Eye On…

• U.S.-China trade negotiations are currently stalled, and for good reason: there has simply not been concerted top-level engagement between the two sides. Indeed, at no point in the past 30 years going back to the first Clinton administration has there been as little high-level contact between the USTR and Beijing in the first 14 months of an administration as is the case currently with the Biden administration. Past administrations sat across the table and sought to press Beijing to liberalize its trade regime and implement structural reforms. Not this administration however, for reasons best known to itself. It is somewhat rich, therefore, for USTR Katherine Tai to suggest that conversations with Beijing—and especially conversations with regard to an agreement that has formally expired—have gotten “more difficult over time.” The administration appears to be comfortable, in fact, with maintaining the status quo in U.S.-China trade relations and moving ahead with other, more urgent, matters; even at the expense of leaving matters unresolved for U.S. businesses. Witnessing this diffidence and perhaps worse, the continuing unwillingness or (political) inability to remove the Trump-era tariffs, Beijing too has continued to reciprocate the attitude by limiting cooperation on trade policy matters to the lowest common denominator level. However, there is a certain inevitability that the two sides, down-the-line, will engage more forthrightly on trade policy matters, perhaps after the administration’s Indo-Pacific Economic Framework (IPEF) is released. It is also becoming increasingly clear that trade policy is no longer the ballast of the bilateral relationship that it used to be in yesteryears. Large market purchases by China, be it of aircraft or corn, no longer elicits the same goodwill across the American political spectrum that it used to. And as for China’s leaders, techno-nationalism rather than two-way trade is viewed as the indispensable ingredient that will deliver the economy to a more sophisticated production structure—especially as the U.S. goes about imposing a range of technology controls on the country.

Expanded Reading

• U.S. Solar: Supply Chain, Legislation and the Complex Road Ahead, FTI Consulting, March 3, 2022
• Strategic Plan: FY 2022 – FY 2026, Office of the U.S. Trade Representative, March 1, 2022
• US-China trade war: was the phase-one trade deal a ‘historic failure’, and what’s next?, South China Morning Post, February 27, 2022 [Paywall]
• Agricultural Outlook Forum, U.S. Department of Agriculture, February 24, 2022
• Bury the U.S.-China Trade Agreement, The Wire China, February 20, 2022 [Paywall]
• Letter from House Republicans to President Biden, Congress of the United States, February 15, 2022