Washington Insider-- Tuesday

Reviving WTO and U.S. Trade Policy

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

WSJ: China Seeking High-Level Meeting With New US Administration

China has continued to push for a meeting between top-level officials from both countries as the Biden administration continues to take shape, according to the Wall Street Journal (WSJ).

Beijing is pressing for a meeting of its top diplomat with senior aides to President Joe Biden to explore a summit between the two nations' leaders, the report said, citing people with knowledge of the initiative. The proposal, made soon after President Xi Jinping congratulated Joe Biden on his election victory, was through letters by the Chinese ambassador to the U.S., Cui Tiankai, and through conversations with intermediaries, the WSJ noted.

Beijing raised the idea starting in December of dispatching Yang Jiechi, a member of the Politburo, the Communist Party's top decision-making body, to Washington. Yang plans to focus on climate change, the pandemic and getting an initial meeting between Biden and Chinese President Xi Jinping, with the focus shifted away from trade — the issue that has dominated Sino-U.S. relations.

Biden, however, has said he would meet first with allies to discuss issues including how to jointly confront China. He has already spoken with Canadian Prime Minister Justin Trudeau and others. The WSJ said Chinese officials believe that the Biden administration will eventually want to renegotiate the U.S.-China Phase One trade deal, but it added it is unclear whether Biden's choice for U.S. Trade Representative Katherine Tai will push for enforcement of the Phase One deal or press for a new round of negotiations.

Given that the Biden administration has made the U.S. economy a priority and trade has been relegated to a lower focus, and the administration's signal that it wants to enlist U.S. allies to take on China, a top-level meeting is not expected to take place soon.

Few Pending Regs at OMB in Wake of Biden Administration Review

Very few regulations remain under review at the Office of Management and Budget (OMB) as the Biden administration undergoes a review of prior and pending regulatory actions from the Trump administration.

There are currently no USDA regulations pending review at OMB, and prior regulations that were at OMB have been mostly withdrawn, including ones dealing with the Supplemental Nutrition Assistance Program (SNAP), the use of radio frequency identification tag for cattle and bison, and a final rule on imports of small ruminants relative to BSE.

Of five pending from EPA, the list still shows the 2021 biofuel and 2022 biodiesel proposed levels as being under review. The regulatory agenda from the Biden administration continues to take shape, but it is clear that many of their initial actions will be linked to likely altering any pending actions left from the Trump administration and then deciding how to proceed relative to regulations that were put in place over the past four years.


Washington Insider: Reviving WTO, US Trade Policy

Bloomberg is reporting this week that the U.S. has considerable work to do before it rolls out its trade policy modifications. For example, the U.S. delegation to the WTO, in a statement Monday, said it's “not in a position” to back a proposal on appellate panel members, citing Biden's inauguration five days ago and continuing work on the transition.

The delay affects attempts to fill the vacancies on the WTO's appellate body – a seven-seat panel that has the final say on disputes that affect billions of dollars in commerce. The gridlock began after the Trump administration unilaterally opposed all new appointments to the panel.

While the U.S. has indicated its intention to work with allies to address mutual international concerns, the fate of the appellate body could remain in a holding pattern as the president attends to more pressing domestic issues. Furthermore, the U.S. Senate has yet to confirm the administration's nominee for U.S. Trade Representative, Katherine Tai, who is expected to lead the administration's approach to WTO reform.

In the meantime, the EU says it plans to introduce a new proposal aimed at addressing U.S. concerns with the appellate body in an effort to engage Washington on substantive reforms to the WTO. “We need a new EU-U.S. understanding on the appellate body or on the dispute settlement system,” EU Director-General for Trade Sabine Weyand said earlier this month.

Weyand said the EU will build upon a roadmap developed by WTO general council chairman David Walker to clarify the WTO's dispute settlement rules and potentially negotiate new ones to address the changes that have emerged since they were first agreed in 1995.

In addition, Bloomberg is reporting that recent remarks from Chinese President Xi indicate his determination to “stay the course” on trade and his charge that the world should abandon “ideological prejudice” and shun an “outdated Cold-War mentality.”

It's vital to stay committed to international law and international rules “instead of staying committed to supremacy,” Xi told the Davos Agenda event on Monday, in his first address since President Biden entered the White House. “Confrontation will lead us to a dead end,” he said, and urged a return to mutual respect to help the recovery from the pandemic.

“To build small circles and start a new Cold War, to reject, threaten or intimate others, to willfully impose decoupling, supply disruptions, or sanctions, or to create isolation or estrangement, will only push the world into division and even confrontation,” he said.

Xi's speech had been widely anticipated for the tone it would set for relations between the world's biggest economies over the next four years. Though Xi did not name Biden by name, many of his comments were clearly targeted at the new U.S. administration. Xi repeated many of the same talking points about multilateralism and “win-win” outcomes that he deployed in his last address to Davos four years ago, days before Donald Trump's inauguration, but he also signaled that he does not intend to change course in the face of U.S. pressure.

“Each country is unique with its own history, culture and social system, and none is superior to the other,” Xi said, warning against imposing a “hierarchy on human civilization” or forcing one's own systems onto others.

During the address, Xi hinted at his desire to reestablish high-level dialogue with the incoming administration, calling for countries to “enhance political trust through strategic communication.” The Chinese leader succeeded in building a cordial personal relationship with Trump even as the two powers descended into a trade war. That effort led to the development of official dialogue tracks which eventually disintegrated over the course of Trump's presidency.

By the time Biden was sworn in, more than 100 officially organized exchange forums had been disbanded and tariffs imposed on almost $500 billion of products. While Biden hasn't given many specifics on how he'll deal with these and other flashpoints, he has signaled a shift from confrontation to competition.

In his speech, Xi steered clear of the triumphal tone evident in some of his domestic addresses in recent years. In a speech last September, Xi said China's pandemic response demonstrated the “superiority” of China's political system. In others, he has argued that “China is moving closer to the center of the world stage.”

And Bloomberg thinks “the president spoke from a position of strength.” China has been the only major economy to report growth amid the pandemic last year, and economists are forecasting an expansion of 8.3% this year, compared with 4.1% in the U.S.

So, we will see. The administration is facing numerous difficult transition objectives just now, including efforts to control the coronavirus and its impacts on the economy. Certainly, the links to China and the EU will eventually be of central importance and producers should watch closely as these key policy links are debated and implemented, Washington Insider believes.

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