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Biden's trade representative pick signals 'more sophisticated' approach to China

President-elect Joe Biden's nominee for U.S. trade representative will use a lighter touch with China on trade while still pushing for structural change in the nations' relationship, according to analysts who stressed her experience holding Beijing accountable and her desire to repair relationships with other global trading allies.

Katherine Tai, the House Ways and Means Committee's trade lawyer, also served as a China trade enforcement chief counsel at the Trade Representative's Office under the Obama administration.

In her Ways and Means role, Tai helped negotiate the United States-Mexico-Canada Agreement, a yearslong effort showing dexterity in navigating conflicts within the Democratic caucus, said Inu Manak, a research fellow at the pro-free-trade Cato Institute in Washington, D.C.

"She will have to navigate the differences within her own party again in the Biden administration, and this experience will serve her well," Manak said in an interview. "Tai will also likely bring a lot of substance back to trade policy discussions, moving us away from the heated political debates of the last four years. She appears to be a very strategic thinker that is acutely aware of both offensive and defensive U.S. trade interests."

Tai also litigated disputes against Beijing at the World Trade Organization for eight years under the Obama administration. Her nomination is subject to confirmation in the Senate. Manak called Tai "highly qualified."

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Tai's nomination comes after a period of tension and escalation between the U.S. and China under the Trump administration, though slight trade progress was made earlier in 2020 under the "phase one" detente deal the two nations signed in January. Under that deal, Washington agreed to slash tariffs on Chinese goods, while China committed to ramp up purchases of U.S. goods by more than $200 billion over two years, though those purchases have lagged behind schedule.

Multidimensional approach to China

If confirmed, Tai would replace Robert Lighthizer, who took a hardline approach to China, levying additional tariffs on $550 billion of imports from the nation in response to allegations of market-distorting practices, including subsidies for domestic companies and forced technology transfer.

Manak expects a less aggressive approach than the Trump administration with Tai at the helm but a sharper focus on correcting the problems in the trading relationship. This means less of an attempt to "punish" China through tariffs and a stronger push for negotiating rules alongside Asian and European allies that match the realities of China's place in the global trading system, Manak said.

This approach would lead to a focus on pursuing "genuine" change in China's behavior than in short-term purchase agreements by China, said Peter Allgeier, president of consulting firm Nauset Global LLC and the former deputy and acting U.S. trade representative under the Bush and Obama administrations.

"Katherine's experience in the trenches will make her much more attentive to the real problems with China's trade, industrial and technology policies," Allgeier said. "Much more sophisticated in her understanding of the real challenges posed by China than Trump's focus on the bilateral trade deficit."

Tai will "be a combination of tough and pragmatic," said Doug Barry, spokesperson for the U.S.-China Business Council, which represents U.S. companies that do business in China. "She's knowledgeable about China from numerous perspective, and she understands issues with other trading partners."

Working with allies

Biden told The New York Times earlier in December that he would not immediately nullify the phase one deal with China nor take steps to remove tariffs the Trump administration imposed on Beijing but said he would continue to crack down on China's alleged practices of intellectual property theft and forced technology transfers, welcoming help from U.S. allies with shared interests.

"Hopefully, this will moderate hardline legislation from Congress while providing a more technocratic and not politically charged framework that European and Asian allies are comfortable working with," said Julia Friedlander, senior fellow and deputy director of the GeoEconomics Center for the Atlantic Council. Tai's "actions will be part of a thorough, deliberative policy process, and not a free-for-all."

Beyond China, experts believe that Tai would roll back the protectionist measures implemented on some of Washington's most longstanding and important trading partners, including the EU, Mexico and Canada. These include the threatened 25% tariffs on auto imports from Europe and the long-running dispute at the World Trade Organization over subsidies to aircraft manufacturers Boeing Co. and Airbus SE.

"The outgoing administration dangled auto tariffs like a Damocles sword over U.S.-EU trade negotiations," Friedlander said. "And the very fact that these will now officially be dead on arrival will clear the air and leave political headroom to finally resolve the Boeing-Airbus dispute."