US, China Officials Review Economic Cooperation, Next Steps for Steel

1 December 2016

Trade officials from the US and China concluded an annual series of meetings last week aimed at addressing bilateral challenges and opportunities for collaboration – including the global steel crisis – along with preparing for the upcoming change in administration in Washington.

The US-China Joint Commission on Commerce and Trade (JCCT) met from 21-23 November in the American capital city, with a full agenda covering various elements of the economic, trade, and investment relationship between the two major economies. Officials from both countries have regularly met in this forum over the past three decades.

Notably, this event is also the last JCCT under US President Barack Obama, capping a period that saw several developments on bilateral cooperation – from trade to climate action – between the two economic powerhouses.

“This is a good time to take stock of the US-China relationship – what’s been accomplished during the last eight years, what we hope to accomplish today, and what we should do together to ensure that our relationship continues to flourish in the coming years,” said US Trade Representative Michael Froman in his opening remarks.

The US trade chief cited excess capacity in steel and aluminium, as well as innovation and agricultural biotechnology, as among the key bilateral issues for discussion this year.

Steel forum

One of the major topics on the global economic stage over the past year has been the overcapacity seen across the steel sector, along with sluggish demand and falling prices. China, the world’s top producer of the metal, has particularly come into focus in this context, though the major players in this sector have since said that the problem spans across countries and will thus require a global solution.

Notably, at the September meeting of G-20 leaders in Hangzhou, China, countries agreed to set up a “Global Forum” that would help in addressing these issues. (See Bridges Weekly, 7 September 2016)

During last week’s meetings, US and Chinese officials agreed to “jointly promote the expeditious establishment” of this forum, along with playing an active role once it has been set up.

Also on the docket will be an informal meeting between the US and China on the subject next year to share information and examine how the sector has evolved. The two sides will also “share the experiences and lessons learned with regard to structural adjustment under the circumstances of steel capacity,” according to a USTR factsheet.

Meanwhile, the World Steel Association predicts that global steel demand will go up by 0.2 percent this year – an improvement over last year’s three percent drop.

Demand next year should increase by 0.5 percent, the industry group says, while suggesting that this “slight growth momentum” will be limited in light of factors such as “rebalancing” in China as well as the sluggish economic recovery being seen in advanced economies.

Other commitments announced by the US and China last week are plans to share information on their aluminium and soda ash industries, also with a view to addressing excess capacity.

Multilateral cooperation

Froman also suggested that the Washington talks may have helped support the ongoing Environmental Goods Agreement (EGA) negotiations in Geneva, of which both the US and China are a part. The 17-member group is aiming to conclude a deal this coming weekend when ministers arrive in the Swiss city, which would cut tariffs on some 300 goods aimed at supporting environmental purposes, including clean energy.

“We have an opportunity to expand trade, strengthen the multilateral trading system, and address major environmental concerns in the negotiation of the Environmental Goods Agreement. I urge our Chinese colleagues to focus on their contribution during those negotiations to a successful close,” said Froman last week.

The US trade chief also touted bilateral progress made in other areas in recent years, such as in supporting a deal on agricultural export competition at the WTO’s Nairobi Ministerial Conference last December, along with being part of a multi-country effort to cut tariffs on various information and communication technology goods through the expansion of the Information Technology Agreement (ITA-II). (See Bridges Weekly, 3 November 2016)

Other issues

While Froman referred to agricultural biotechnology as one of the top issues heading into this year’s JCCT, officials indicated afterwards that the agricultural components of the talks struggled to advance. The US has repeatedly pushed for China to speed up the review of various pending applications to grow biotech food crops, along with making updates to the overall approval process.

Administration officials suggested, however, that some advances could still be made in the near-term, without giving further specifics.

“I remain optimistic that, in the final weeks of this Administration, we can still make additional progress on priority issues including biotechnology approvals and market access for US beef,” said US Agriculture Secretary Tom Vilsack.

US officials listed among the other outcomes a commitment to improve the implementation of previously agreed JCCT items, along with pledges from China to improve intellectual property rights (IPR) enforcement – such as by tackling “bad faith” trademarks – and better ensure that innovation-driven policies do not discriminate against foreign companies. Both Washington and Beijing have also agreed to train smaller businesses on both sides on the IPR subject through e-commerce platforms, with China to also pursue the enactment of further e-commerce laws domestically.

Changing leadership

On 20 January, a new Republican administration under President-elect Donald Trump will take office in Washington. The transition period usually spans over several months, as cabinet-level posts go through Senate confirmation processes, among the other myriad changes that take place. This period generally takes some months to complete.

What the incoming leadership will mean for the US-China relationship is not yet clear. While trade ties with China were a common topic on the campaign trail – with Trump suggesting he would move to have China named a “currency manipulator” once he is in office – this particular rhetoric regarding trade with the Asian economic giant is often a regular feature of US election politics, and does not necessarily preclude what the approach of a new administration would be in practice. (See Bridges Weekly, 30 June 2016)

“The US has had an election that will bring a new administration to Washington and that moment is fast approaching. There is a degree of uncertainty about what the future will hold, a certain amount of which is inevitable as you go through our transition,” said US Trade Representation Michael Froman during the event’s opening plenary.

Froman therefore urged officials on both sides to spend the remaining weeks of the Obama Administration to do their utmost to shore up the bilateral Sino-American relationship, in order to prepare for any approach that the new administration might take along with the larger challenges facing the global economy.

“Because this is my last JCCT meeting, I want to emphasise the need to keep the US-China relationship on an even keel, even as we sail into the strong headwinds of populism and protectionism that are blowing all around the world,” he added.

ICTSD reporting.

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