U.S., EU WEIGH ACTION ON CHINESE MEDICAL DEVICE SUBSIDIES: The United States and the European Union signaled they are preparing for a possible assault on Chinese support for the medical device industry, one of many high-tech sectors that Beijing targeted for development under its Made in China 2025 plan. "We have started exchanging information on the market situation of U.S. and EU medical devices companies in China, in order to better understand the impact of China's non-market policies and practices on U.S. and EU companies," a White House National Security Council spokesperson said in a statement summarizing expected outcomes from today's U.S.-EU Trade and Technology Council meeting. "The United States and the European Union are also deepening their exchanges to identify shared concerns relating to China's increasing use of the investment funds." The medical device and pharmaceutical industry is one of 10 sectors the Chinese government has targeted for substantial support, along with others, such as advanced information technology, robotics and automated machine tools, aircraft and aircraft components, new energy vehicles and electrical generation and transmission equipment. "By some estimates, the Chinese government is making available more than $500 billion of financial support to these sectors, often using large government guidance funds that China attempts to shield from scrutiny by claiming that they are wholly private," USTR said earlier this year in an annual report. "China's non-market distortions in these newer sectors will likely result in oversupply, leading to loss of jobs and production in market economies." A draft of the TTC joint statement the United States and the European Union are expected to release later today says the two sides will work together to understand the impact of China's "non-market policies and practices" on U.S. and EU medical device companies and explore "policy tools" which could address those concerns. More outcomes expected: Leaders are expected to announce other initiatives as part of the gathering, the NSC spokesperson noted. Those include a transatlantic initiative on sustainable trade that supports the transition to a low-carbon economy, as well as alignment on charging stations for consumer and heavy-duty vehicles. There will also be new administrative arrangements to cooperate on semiconductor supply chains, a pilot program that aims to simplify export controls and a joint commitment to identify and address economic coercion. For techies, look for a joint roadmap to evaluate trustworthy artificial intelligence and an expert task force focused on quantum information science. TAX CREDIT DISPUTE STILL LOOMS: The outcomes from today's TTC meeting are unlikely to overshadow the still-lingering dispute between the trading partners over U.S. tax credits for electric vehicles manufactured in North America. EU leaders indicated prior to the gathering that the issue would be a sticking point if it was not resolved — and so far no resolution has been reached. EU eyes industry aid: EU Commission chief Ursula von der Leyen said on Sunday that Brussels must ease state aid rules and reassess the need for new funding at the EU level — the first time she has laid out possible pathways for the bloc to counter U.S. subsidies in the Inflation Reduction Act. "If investments in strategic sectors leak away from Europe, this would only undermine the Single Market. And that is why we are now reflecting on how to simplify and adapt our state aid rules," she said. The bloc must go beyond "ad hoc" solutions and come up with a structural response to the risk of deindustrialization. "A common European industrial policy requires common European funding," she said. Biden not going to Congress: There was hope of a breakthrough on the issue last week when President Joe Biden, following a tête-à-tête with French President Emmanuel Macron, described "glitches" in the law and expressed optimism that the two sides could come to an agreement. Those talks are still ongoing. But the administration isn't looking to Congress for the solution. White House press secretary Karine Jean-Pierre told reporters Friday: "We don't have any plans to go back to Congress for legislative changes." SENATORS PUSH END-OF-YEAR TRADE PACKAGE: Congress adjourns for the holidays in a matter of weeks, but Sens. Rob Portman (R-Ohio) and Chris Coons (D-Del.) want their colleagues to push through an ambitious trade package in that time. "We know that in Congress, it's often easier to kick the can down the road another year — or five. But on trade, the stakes for our economy are too high, and the time is ripe for bipartisan progress right now," the pair write in an op-ed published Friday by The Hill . The proposal: Portman and Coons have suggested a package that authorizes the Biden administration to negotiate sector-specific agreements with World Trade Organization countries, as well as full-fledged free trade agreements with the United Kingdom, Kenya, Taiwan and Ecuador. It would also renew trade-related programs that have expired in recent years, namely Trade Adjustment Assistance, the Generalized System of Preferences and the Miscellaneous Tariff Bill. Reality check: There's a reason Congress has been unable to move trade legislation to Biden's desk. The House and Senate remain at odds on the terms of the expired trade programs. And some lawmakers are hesitant to pass Trade Promotion Authority without buy-in from the administration, which has expressed no desire to negotiate free trade agreements. Still, Portman and Coons are undeterred. "Plenty of trade legislation has passed either the House or Senate this Congress, creating a universe of priorities to draw upon," they write. "And it is possible that critical programs that have expired will languish for many years if a consensus is not reached now." RAIMONDO DEFENDS U.S. DOMESTIC SUBSIDIES: U.S. subsidies designed to spur domestic manufacturing of semiconductors are "completely different" from measures that China has taken in recent decades to bolster its own industries, Commerce Secretary Gina Raimondo argued Sunday in an interview on CNN's Fareed Zakaria GPS. China's use of intellectual property theft, market access barriers and subsidies for domestic producers have drawn sharp criticism from the U.S. and other trading partners as unfair distortions of the global market. But recently, key trading partners have drawn comparisons between Beijing's subsidies and incentives Washington is offering U.S.-based producers. "That's an utterly different strategy, and I don't think anyone could say … that's apples and apples as it relates to what we are doing," Raimondo said. "The reality is we need these companies to build these fabs in the United States of America, and it is more expensive to do that here relative to, say, Taiwan." Giving to the rich: The semiconductor incentives will see the government dole out $52 billion to private companies that agree to build plants in the U.S. Those plans have also drawn criticism from more progressive wings of the Democratic party who oppose giving taxpayer dollars to multibillion-dollar corporations. "I don't think anybody loves providing taxpayer money to large, profitable companies," Raimondo said. "But the reality is that for our national security, we are in an untenable position buying all of the most sophisticated chips that we need from Taiwan and Korea." No Raimondo 2024: Asked whether she would pursue the Democratic presidential nomination should Biden bow out, Raimondo sounded resolute: "No, that is not my plan. That is not what I will do." The commerce secretary noted that she believes Biden will run "and I so hope that he does," she added. "I'm all in with him." BIDEN WANTS TO FOCUS ON AFRICAN SUPPLY CHAINS: The Biden administration aims to shift its trade strategy with African countries from one that focuses on natural resources to instead think "strategically about fostering supply chains," U.S. Trade Representative Katherine Tai said Friday at an Atlantic Council event. That new approach on trade between the U.S. and African nations may become more clear when the Biden administration hosts a three-day U.S.-Africa Leaders Summit beginning next week. Tha confab will focus on efforts to "foster new economic engagement," as well as issues like food insecurity, climate change and human rights. "There has been very unequal, imbalanced relationships between resource-rich countries that are looking for development opportunities and those who are more advanced on the development scale," Tai said. Wamkele Mene, the secretary-general of the African Continental Free Trade Area, told the Atlantic Council that investment, job creation and innovation across the continent will be a focus of the summit, with a particular emphasis on how the U.S. can be more engaged.
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