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The United States does not want a trade “divorce” with China

The United States is trying to be strategic about how it ‘realigns’ its trade relationship with China, but is not interested in large-scale ‘decoupling’ or trade ‘divorce’, the US representative told the trade Katherine Tai in an interview this week. .

Tai made the remarks in Singapore, where she had been to discuss the Biden administration’s Indo-Pacific economic framework. The purpose of the framework, she said, “is to enable the United States and our most like-minded partners in this region to be able to collaborate on key economic issues and emerging global challenges. And that includes working together to promote resilience and sustainability in our own economies, as well as through partnerships with the economies of others.

Tai made his comments in an interview with Bloomberg Television.

New approach

Tai’s trip to Singapore came just days after she told Congress during testimony before the House Ways and Means Committee that it was time for the United States to reevaluate how it treats China as a trading partner.

Past measures, including the tariff regime imposed by the Trump administration, have failed to get China to open its markets to U.S. products and avoid anti-competitive behavior, she told lawmakers. .

In Tuesday’s interview, Tai said the United States may need to use “other tools” to adjust its relationship with China.

Emphasizing what those other tools might look like, she said, “I think it’s less about what more we can do for China. I think it’s more about how we can shape the trade relationship between the United States and China and, again, realign it to create incentives for our economic actors to ensure that this relationship is balanced, fair and also, importantly, that contributes to a sense of security and resilience not only for our economies, but for the global economy.

Recognize reality

Tai’s explicit exclusion from a U.S.-China trade divorce may reflect the simple reality on the ground in the Indo-Pacific region, said Gary Hufbauer, senior fellow at the Peterson Institute for International Economics.

“All of these countries have more trade with China than with the United States,” he told VOA. “And furthermore, trade with China is growing faster than with the United States, so they have no real commercial interest in any decoupling or divorce.”

Leaders in the region have repeatedly expressed concern that they are being placed in a position where they are forced to choose between partnering with the United States and partnering with China. Their concern has been heightened by rhetoric from US lawmakers, some of whom have pushed for trade deals that isolate China.

“That notion faded away in his rhetoric,” Hufbauer said, relating Tai and the Biden administration to what he called the “realist camp.”

“Trade flows, their magnitude, and now also investment flows – they don’t favor a split into two camps,” he said. “Because too many countries have very strong interests in maintaining good trade relations and good diplomatic relations with China and the United States”

End of tariffs

“It’s encouraging that a senior administration official is saying that economic decoupling is not an administration goal,” Doug Barry, senior director of the US-China Business Council, told VOA in an exchange. emails.

“Anything Ambassador Tai has in mind in terms of a new trade policy towards China must include preserving and increasing the benefits of the current relationship,” Barry said. “That would include scrapping Trump-era tariffs, which didn’t change China’s behavior and instead hurt American workers, farmers and families.”

Barry said his organization would like to see more high-level trade talks between U.S. and Chinese leaders, but said “due to the domestic politics of both countries, such talks seem unrealistic until the end of this year at the earliest”.

Re-establishing an American presence

Tai’s trip to Singapore is, in part, an effort to re-establish a US presence in the region on trade issues.

In 2017, then-President Donald Trump pulled the United States out of the Trans-Pacific Partnership, a massive regional trade deal that had taken years to negotiate. The agreement was resurrected without U.S. participation as the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP), one of the largest free trade organizations in the world.

Some of the CPATPP participants have expressed hope that the United States will join the trading bloc, but the Biden administration has said it will not, preferring to work within the Indo-Pacific economic framework. China has stated that it would be interested in joining the CPATPP. However, existing members including Japan and Australia have said they believe Beijing’s massive interference in free markets disqualifies China from membership.

Singapore as a key partner

Experts say Tai’s trip to Singapore highlighted the role the city-state could play in the future proposed by the Biden administration.

“Singapore is a natural partner for Southeast Asia in developing an Indo-Pacific economic framework,” Brian Harding, senior expert on Southeast Asia at the US Institute of Peace, told VOA.

“Singapore welcomes Chinese economic activity in Southeast Asia but is lucid about China’s strategic intentions,” Harding said. “While Singapore may be a strong advocate of the importance of the United States to regional stability, it is also concerned that US-China competition is inherently destabilizing.”

VOA Mandarin Service reporter Jessie Jiang contributed to this story.

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