U.S. Trade Representative Katherine Tai promised lawmakers Wednesday that work has begun to work out trade disputes with the European Union and the UK to create what President Joe Biden calls “a united front of U.S. allies,” but she largely left questions about China unanswered as the U.S. continues to study the situation.
“We need to figure out how to resolve our differences in order for us to come together to meet the challenges that we have today and that we will have tomorrow,” Tai said about the U.S., EU and UK trade dispute over aircraft manufacturing subsidies.
The World Trade Organization ruled last year the U.S. had the right to hit EU nations with $7.5 billion in tariffs because of Europe’s Airbus subsidies. The WTO also ruled in that the EU could hit the U.S. with $4 billion in tariffs to punish the U.S. for subsidizing Boeing. Both the U.S. and EU began levying those tariffs, causing significant political friction and trade disruption.
U.S. commodities hit by European tariffs included orange juice, cotton, grapefruit, almonds, walnuts, cheese, ketchup and rum.
In early March the U.S., EU and UK agreed to suspend all of the tariffs tied to airplane subsidies for four months to reach a negotiated settlement and repair their relationship. Ag Secretary Tom Vilsack went even further, saying the cease-fire could lead to a resumption of talks for a free trade agreement.
The U.S. and EU are now one month into the temporary halt to tariffs and Tai told members of the Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies that the two sides are working together to come to an agreement.
“I have been in touch with my counterparts in both the United Kingdom and the European Union,” Tai told the senators. “I am, at this point, very motivated and hopeful that we will get the traction that we need with our trading partners and very much hope that they see this opportunity as I do.”
She did not promise to get a resolution over the next three months, but Sen. Jerry Moran, R-Kan., said he is hopeful.
The U.S. and EU also remain divided over U.S. Section 232 tariffs on European steel and aluminum that continue to provoke EU retaliatory tariffs on U.S. whiskey and other goods.
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Tai said the two sides are meeting to work out a resolution to that too.
“We continue to have a global overcapacity problem that is distorting the international (steel and aluminum) market,” Tai said.
As to China, there were plenty of questions from senators about the state of the “phase one” trade deal.
Tai said the issue is on the “forefront of my mind,” but offered no plan to address the ongoing trade war.
“We are drilling down at USTR, using the usual discipline that we have to look at the overall compliance picture and to examine China’s performance under this agreement and all of its component parts,” she said. “We’re still in the middle of a review.”
The China deal calls for the USTR and her Chinese counterpart to meet every six months. That meeting is overdue, but Tai only suggested it would happen in the “near term.”
“I will be having my first meeting with my Chinese counterpart, which I am looking forward to at the right time,” she said.
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