US-China Comprehensive Economic Dialogue Ends With No Joint Statement, Canceled Press Briefings
The July 19 U.S.-China Comprehensive Economic Dialogue ended with no bilateral joint statement and canceled press conferences by both countries, a Commerce Department spokesman confirmed. Such bilateral dialogues usually produce a joint statement of commitments by both countries. The last iteration of U.S.-China economic dialogues, dubbed the U.S.-China Strategic & Economic Dialogue, under the Obama administration in 2016 ended in a joint fact sheet stating China’s agreement not to initiate new efforts to boost steel capacity (see 1606080041).
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The icy ending to the July 19 talks comes after observers pointed to China as a major contributor to global overcapacity as the Trump administration continues its Section 232 national security investigation into steel imports (see 1706220038 and 1706060026). The conclusion also comes a month after the Food Safety and Inspection Service issued a proposed rule to allow imports of China-slaughtered cooked poultry (see 1706160035) and after China recently started to accept U.S. beef exports for the first time since 2003 (see 1706150037).
The "conventional wisdom" is that the fizzled dialogue sets the stage for tough U.S. unilateral action, with steel being the most likely target, Stimson Center distinguished fellow Bill Reinsch said in an email. "The problem with that is that it is hard to figure out exactly what to do on steel that will affect China but not our friends and allies, since Chinese exports of steel directly to the US have dropped so much because of the AD/CVD cases," he said. The results of the administration's steel Section 232 investigation, expected in the coming weeks, could mark a pivotal moment in the U.S.-China economic relationship, Cato Institute trade policy analyst Simon Lester said in an email. “This could, potentially, be a very provocative action, and it will be interesting to see how China responds.”
The dialogue's apparent impasse probably won't jeopardize FSIS's poultry import regulation, but gives detractors a reason to suggest withdrawal of the agency's proposed rule, Reinsch said. Keeping the U.S. market closed to Chinese poultry could motivate China to discontinue allowance of U.S. beef exports, the one clear accomplishment from recent bilateral trade talks, he said. China's main short-term trade objective with the U.S. is to "kick the can" past this fall's 19th Party Congress in Beijing, where new leadership of the Communist Party of China will be elected, Reinsch said. "That means no big concessions to the US or no big fights with the US, either of which would allow people to criticize [Chinese President] Xi [Jinping] for his management of the relationship," he said. "That, in turn, means we won’t get much out of them before that, and strong action on our part will force strong reaction on theirs, at least in the short run."
In a statement released after the discussions, Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin said China “acknowledged our shared objective” to reduce the U.S. bilateral trade deficit, “which both sides will work cooperatively to achieve.” They also noted that the U.S. and China have progressed on important issues like U.S. liquefied natural gas exports, electronic payments and commercial payments since Xi and President Donald Trump met at Trump's Mar-a-Lago resort in Florida in April (see 1704100008). “The principles of balance, fairness, and reciprocity on matters of trade will continue to guide the American position so we can give American workers and businesses an opportunity to compete on a level playing field,” Ross and Mnuchin said. “We look to achieving the important goals set forth by President Trump this past April in Mar-a-Lago.”
Ross in an opening public statement for the dialogue lamented the growing U.S. trade deficit with China, noting that while China is the U.S.’s third-largest export market and U.S. exports to the country have grown nearly 14 percent per year over the last 15 years, China's exports to the U.S. have increased by 268 percent during the same time frame. The U.S. bilateral trade in goods deficit has also grown from $101 billion to $309 billion since 2002, and China accounts for almost half of the U.S. overall goods trade deficit, he said. “If this was just the product of natural free market forces, we could understand it,” Ross said. “But it’s not. And so it is time to rebalance our trade and investment relationship in a more fair, equitable and reciprocal manner.”
Email ITTNews@warren-news.com for a copy of the Ross and Mnuchin statement following the dialogue.