The Biden administration will put the trade deal struck with China by Donald Trump “under review” as the broader US relationship with Beijing is assessed, the White House said on Friday.
The “phase 1” trade deal signed in early 2020 paused a rapidly escalating trade war between Washington and Beijing that had rattled global markets and led to tariffs of billions of dollars on traded goods.
Under the terms of the deal, which is widely considered to be limited in scope, China promised to significantly boost its purchasing of US products such as soyabeans and energy products.
However, China has also struggled to keep pace with its purchasing commitments, leading trade analysts to question whether the promises to buy a targeted amount of US goods can be kept.
When asked whether Mr Biden considered the phase 1 trade deal to still be in effect Jen Psaki, White House press secretary, said on Friday that “everything the past administration has put in place is under review”.
“I would not assume things are moving forward”, Ms Psaki said. “We are just reviewing what the path forward looks like, and doing that, again, from a position of strength, which means coordinating with our allies, members of Congress and making a determination before we engage further.”
Under the terms of the deal, China agreed to buy $200bn more of US goods and services than it did in 2017, before the start of the trade dispute, over a two-year period to the end of 2021.
However, Chinese and US trade data show that Chinese purchases of US goods are far behind unofficial prorated targets a full year after the agreement has been in effect.
According to analysis from the Peterson Institute for International Economics, Beijing has purchased just 58 per cent of the US exports expected under its projections, based on data to the end of last month.
China’s imports of US products covered by the trade deal purchase commitments amounted to $100bn by the end of December, compared with a prorated target of $173.1bn, the institute said.
The shortfall presents a challenge to the Biden administration as it decides how much of Mr Trump’s trade policy on China to keep in place, including whether to preserve US tariffs on billions of dollars of Chinese imports.
Robert Lighthizer, who as Mr Trump’s top trade official oversaw US trade negotiations with Chinese officials, said this month that the phase 1 deal contained more than just purchasing commitments, citing changes to IP protections and new rules on forced technology transfer.
Nevertheless, the agreement has come under sustained political pressure, not least from Mr Trump who, before leaving office, had threatened Beijing with even more tariffs.
In a speech this month, Katherine Tai, the new US trade representative, said that “stiffening competition from a growing and ambitious China” would be one of the most important issues in her brief.
Additional reporting by Lauren Fedor
Source: Economy - ft.com
