Biden trade pick says China needs to deliver on phase-one pact

President Joe Biden’s nominee for trade chief said China needs to deliver on the commitments it made in its trade pact with the U.S. last year, the strongest signal yet that the new administration wants the Asian nation to live up to the terms.

There are promises in the agreement that need “to be delivered on,” Katherine Tai, the pick for U.S. trade representative, told senators during her confirmation hearing on Thursday. “With respect to structural changes within China, we would all be delighted to have those structural changes in China, to have our economies be more compatible.”

The U.S. and China fought a trade war under President Donald Trump that continues to see tariffs applied on about $335 billion of Chinese goods annually. In the agreement reached in 2020, China promised to purchase more American products. Beijing missed its 2020 trade-deal targets as the global pandemic upended shipping and supply chains.

China also pledged to combat the theft by Chinese companies of U.S. intellectual property and to do more to enforce IP rights in the country while also opening up its domestic market to U.S. financial service providers.

The White House has said the trade deal, as well as other China-related actions taken by the previous administration, are under review until the Biden team decides on a path forward.

Tai is expected to pursue a hard line in U.S.-China negotiations while also embarking on a more methodical and practical style to distance the Biden administration from the chaos that defined the Trump team’s trade agenda. Tai, whose nomination requires Senate approval, will play a key role in setting and implementing Biden’s trade policy, which they both have promised to focus on workers and the middle class.

Among the trade challenges facing the Biden administration is deciding what to do with the phase-one deal that President Donald Trump struck with China in early 2020 and the hundreds of billions of dollars in tariffs that remain in place. Biden has pledged to work with allies to confront China rather than face the nation alone as Trump did, a theme echoed by Tai.

Tai committed to a top-to-bottom review at the USTR with regard to addressing China, telling Senator Rob Portman—who said he did such a review when in the job 16 years ago—it was an “excellent idea.” She noted the Biden administration already has committed to a “holistic review” of China policy.

Work With Allies

In her prepared remarks before the Senate Finance Committee, Tai pledged to work with allies to take on China while also embarking on a pragmatic approach to the Asian nation, saying it’s both a rival and partner whose cooperation the U.S. needs to address global challenges.

Without going into specifics of how she would address tariffs, export bans and other key issues, Tai said she knows the “opportunities and limitations in our existing toolbox.”

“We must recommit to working relentlessly with others to promote and defend our shared values of freedom, democracy, truth, and opportunity in a just society,” Tai said.

Tai, in the prepared remarks, touted her own experience as the chief counsel for China enforcement for three years at USTR, saying that she knows firsthand the importance of holding the nation accountable for its unfair trade practices, but also the dexterity required in U.S. policy.

Tai spent the past four years as the chief counsel for Democrats on the U.S. House Ways & Means Committee responsible for trade. She was a key figure in negotiations with the Trump administration and House Speaker Nancy Pelosi on a revamped North American Free Trade Agreement, which passed both the House and Senate with overwhelming bipartisan majorities and was signed by Trump last year.

The bipartisan support extended to Tai’s confirmation hearing. While nominees traditionally get an introduction at the hearing from a lawmaker of the same party, Tai was flanked by the Democratic chair of the Ways and Means panel, Richard Neal, as well as its top Republican, Kevin Brady. Brady praised Tai for her “impeccable” credentials during the hearing.