Thread by @ChadBown

US-CHINA TRADE UPDATE (THREAD)

On Friday, trade beat reporters for multiple media outlets reported that the Biden administration was considering a new "Section 301" unfair trade investigation of China.

This one reportedly would examine China's industrial subsidies. 1/

The Biden administration is targeting Beijing’s widespread use of industrial subsidies that give its companies an edge over foreign rivals

By @BobDavis187 & @Lingling_Wei
wsj.com/articles/biden… 2/

The Biden administration is weighing a new investigation into Chinese subsidies and their damage to the U.S. economy

By @Jendeben
bloomberg.com/news/articles/… 3/

Senior US officials are debating whether to open an investigation into China’s use of industrial subsidies

By @JamesPoliti
ft.com/content/76dd14… 4/

Yes, Section 301 is the US trade law that Trump used to legally implement trade war tariffs that still cover $335bn of imports from China, have led to Chinese retaliation hitting 58% of US exports to China.
piie.com/research/piie-… 5/

Trump's Section 301 investigation focused on China's unfair intellectual property rights practices, including forced technology transfer (FTT), corporate espionage, and other forms of IP theft hurting American companies. 6/

More generally, Section 301 is the law under which the US government conducts unfair trade investigations. The law does not say the outcome must be more tariffs. Eg, Section 301 was used to investigate Europe's digital services taxes, where tariffs are not being imposed. 7/

At this stage it is premature to speculate that Biden is doing this simply to impose more tariffs on China. It could turn out that way. But it could turn out many other ways too.

Why is Biden doing THIS investigation? 8/

China's economic system of direct subsidies, state-owned enterprises, and combination of OTHER policies that replicate the effect of economic subsidies are a challenge for the United States as well as the EU, Japan, and other countries in the trading system. 9/

Trump's unilateral trade war approach of tariffs did not make any progress. As @J_A_Hillman and I wrote in October 2019, Trump’s Phase One “Truce” did NOTHING to tackle the China subsidy problem.
This was unsurprising.

piie.com/blogs/trade-an… 10/

Confronting China's subsidies is not something the US can pull off alone for simple cost/benefit reasons. Because the US would not capture the full "benefit" of addressing China's subsidies - some would spillover to EU, Japan, etc - the US alone won't invest sufficiently. 11/

Again, the Section 301 investigation is only the first step.

Note: Coincidentally, US and EU also announced last week dates for the first ministerial meeting of the EU-US Trade and Technology Council, where some of this may be discussed

https://twitter.com/VDombrovskis/status/1435895919451455488?s=20

12/

US-China trade welcome back!

Here is a paper that SUMMARIZES -- all in one place -- the key US-China trade war actions and Phase One agreement during the Trump administration. (All the stuff that took place January 20, 2017 - January 20, 2021.)
piie.com/publications/w… 13/

US-China trade welcome back!

Here is the latest monthly update to the status of China's purchase commitments under the Phase One agreement.
piie.com/research/piie-… 14/

Here is our @PIIE Trade War timeline 15/

piie.com/blogs/trade-in…