NO SIGN OF TARIFF RELIEF FROM MEETINGS: U.S. Trade Representative Katherine Tai followed Biden's meeting with Xi with her own sit-down Friday with Chinese Commerce Minister Wang Wengtao on the sidelines of the annual Asia-Pacific Economic Cooperation forum leaders meeting in Bangkok, Thailand. It was the first time Tai met face-to-face with a senior Chinese official since taking office 20 months ago, although she did have two virtual meetings with Chinese Vice Premier Liu He in 2021. The Chinese Commerce Ministry said Tai and Wang had "candid, professional and constructive exchanges" on China-U.S. economic and trade issues of common interest as well as multilateral and regional economic and trade issues. Vice President Kamala Harris also had a brief exchange with Xi Saturday at the APEC summit, where she reiterated Biden's line about the importance of keeping lines of communications open. However, a USTR spokesperson told Morning Trade he had "no news to share at this moment" on future U.S.-China trade meetings. CBP data released earlier this month show the United States has collected more than $160 billion worth of tariffs on Chinese goods under the Section 301 action imposed by Trump. That includes approximately $77 billion during the Trump administration and $83 billion since Biden took office in January 2021. Mandatory review: Although no breakthrough on tariffs was expected from the Biden-Xi meeting, many business groups remain eager for relief. Short of a negotiated settlement, the most promising avenue could be USTR's mandatory four-year review of the tariffs, which kicked off in May and entered another phase this month with a new request for comments on the merits of the duties . That comment period ends on Jan. 17, followed by potentially months of further administration deliberations. Court case: The U.S. Court of International Trade could issue a decision in the long-running legal battle over the tariffs in coming months. The Justice Department, on behalf of USTR, filed its latest brief in that case on Nov. 4 and Akin Gump, the lead law firm for companies seeking refund of the duties, is expected to respond by Dec. 5. Exclusion wild card: Congress also could direct USTR to resume granting "exclusions" from the tariffs on a case-by-case basis. However, it seems unlikely that a deal on that and other trade issues will come together in the lame-duck session. GERMANY'S RISING EV TAX CREDIT ANGST: Up until now, France has been the leading advocate of strengthening European industry with state largesse while Germany has not wanted to launch a subsidy race against America. But the sands are shifting following U.S. approval of the Inflation Reduction Act, which contains generous electric vehicle tax credits for electric vehicles that are assembled in North America and meet other increasingly rigorous domestic content provisions that will be phased in over the next six years for critical minerals and battery components. European Commission officials have told EU member states that a bilateral task force set up to manage the issue has provided little hope of a satisfactory solution. And in Washington, U.S. industry officials see little chance of Congress changing the legislation or the Treasury Department implementing it in a way that addresses the EV tax credit concerns raised by the EU, South Korea, Japan and the U.K. That's increasing transatlantic trade tensions ahead of the semi-annual U.S.-EU Trade and Technology Council meeting in Washington Dec. 5. A NEW WAY TO FIGHT CHINESE IMPORTS: U.S. Trade Representative Katherine Tai has called on Congress to provide new tools to fight against unfair trade from China. A new report from a technology think tank says lawmakers should do that by revamping a 72-year-old law that empowers the U.S. International Trade Commission to bar imports. "It is time for the U.S. government to add an assertive tool of trade self-defense against China," Rob Atkinson, president of the Information Technology and Innovation Foundation, wrote. "The focus should be on banning imports from Chinese firms … where there is a reasonable assurance that the firms benefited from significantly unfair economic, technology, trade, or other practices that give them an unfair advantage in the U.S. market." Specifically: Atkinson suggested Congress make a number of changes to the Section 337 statute in the 1930 Tariff Act that has primarily been used in recent years to adjudicate patent disputes. Those include making it clear that the ITC can also issue "exclusion orders" to bar imports because of unfair fair foreign trade practices, he said in an interview. "As long as [Chinese President] Xi Jinping is in power, we cannot change Chinese policy. They're going to keep doing what they do, which is unfair, distortive, predatory," Atkinson said. It's also unlikely that there is enough political will in Congress to provide funding for a robust U.S. industrial policy, so the United States needs to find ways to "make it less profitable for their firms to benefit" from unfair Chinese government practices, he added. Better than a 'blunderbuss': Former President Donald Trump imposed tariffs ranging from 7.5 percent to 25 percent on hundreds of billions of dollars of Chinese goods. But the problem with that approach is "that it uses blunderbuss rather than a rifle shot," Atkinson wrote. A drop in the value of China's currency against the dollar can also blunt the impact of tariffs or anti-dumping duties, while an import ban is absolute, he said. The proposed reforms should also make it clear that "any agency of government can file a complaint to initiate a Section 337 unfair trade investigation," rather than requiring the cases to be brought by companies at their own expense, Atkinson said. Congress also should appropriate more money for the ITC to conduct such investigations and for U.S. Customs and Border Protection to enforce exclusion orders, he said. Capitol Hill interest: ITIF is planning an event with Sens. Mark Warner (D-Va.) and John Cornyn (R-Texas) — both of whom sit on the Finance Subcommittee on International Trade, Customs, and Global Competitiveness — next Monday to tout the report. CHAMBER JOINS WITH YELLEN TO PUSH FOR CHILEAN TAX TREATY VOTE: As Senate Majority Leader Chuck Schumer looks for ways he can work with Republicans , the U.S. Chamber of Commerce hopes that will include a 2010 tax treaty with Chile . U.S. Treasury Secretary Janet Yellen urged Schumer in August to schedule a vote on the pact, which has been languishing since the Obama administration. She argued it would level the playing field for U.S. companies investing in Chile and competing with foreign companies whose governments already have a tax treaty with the South American nation. Treaties need a two-thirds vote in the Senate to win approval. Chamber officials said they are optimistic it would easily clear that threshold, despite Sen. Rand Paul 's (R-Ky.) history of blocking votes on tax treaties. Show me the lithium: Neil Herrington, senior vice president for the Americas Department at Chamber, played up Chile's vast lithium reserves and competition with China in an interview with Morning Trade about why the Senate should approve the treaty. The United States and the rest of the world are going to need "massive" quantities of lithium in the coming decade as they ramp up production of electric vehicles, solar panels and other climate-friendly technologies that run on rechargeable batteries, Herrington said. North Carolina-based Albemarle has the world's largest lithium mine in Chile, but it relies on a temporary tax exemption to compete with companies from other countries that already have a tax treaty with Chile, Herrington said. Chile's new leftist President Gabriel Boric Font plans to pursue tax reform next year "and there's no guarantee that that exemption will remain" in place if the treaty is not approved, he said. Republican support: The Senate Foreign Relations Committee approved the treaty on a voice vote in March, after 18 Republicans urged action. "The Treaty is vitally important to U.S. foreign direct investment in Chile," the Republicans said in a letter last year. "Without ratification of the Treaty, Chilean tax rates are due to increase on U.S. companies' Chilean operations and could reach a rate of 44.45 percent." Latest attempt: The Foreign Relations Committee has voted several times over the past decade in favor of the treaty, but none of those led to floor action. Supporters are hoping for a different outcome this time.
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