Trade a background issue at China summit — GOP pushes new trade talks — Dems urge end to Buy American waivers for Covid aid contracts

Delivered every Monday by 10 a.m., Weekly Trade examines the latest news in global trade politics and policy.

Mar 15, 2021 View in browser   By Gavin Bade With help from Steven Overly Editor's Note: Weekly Trade is a weekly version of POLITICO Pro's daily Trade policy newsletter, Morning Trade. POLITICO Pro is a policy intelligence platform that combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. Quick Fix — Tariffs and trade restrictions won't be high on the agenda at the first bilateral meeting between Chinese diplomats and President Joe Biden's team, but the sides are expected to discuss a number of contentious issues with big commercial consequences, like human rights abuses in Xinjiang. — Rep. Kevin Brady, the Republican leader on Ways and Means, wants Biden to commit to a new round of trade talks with China as part of the summit, saying compliance with Trump's "phase one" agreement is not enough. — And a baker's dozen Democratic senators asked the president to end country waivers to the Buy American program for contracts funded by the Covid-19 relief bill that Biden signed last week. It's Monday, March 15. Welcome to Weekly Trade, where we're still basking in the glory of Georgetown's improbable run to the Big East Conference championship on Saturday night. Picked to finish last in the conference at the start of the season, head coach Patrick Ewing inspired the Hoyas to a blowout victory over Creighton at Madison Square Garden. Now it's on to the NCAA tournament. Who do ya got? soverly@politico.com, gbade@politico.com and dpalmer@politico.com. DRIVING THE WEEK TRADE A BACKGROUND ISSUE AT U.S.-CHINA SUMMIT: Trade issues will have to take a back seat this week when top U.S. officials meet with their Chinese counterparts in Anchorage, Alaska, on Thursday. Tariffs not on the menu : The State Department has promised a "difficult" discussion that will hit on some trade-adjacent items like technology and the Communist Party's ongoing repression of ethnic Uighur Muslims in Xinjiang, which the U.S. has labeled a genocide. But for the most part, commercial issues will be secondary. The U.S. will not make tariffs and export controls imposed on China a focus of the meeting, Sullivan said Friday, and Beijing's poor compliance with the trade deal it struck last year also appears off the table. "I don't expect that, for example, the phase one trade deal is going to be a major topic of conversation next week," Sullivan said. Chinese send a different message: The Chinese government countered the U.S. narrative, with an analyst at a Communist Party think tank telling the Global Times that tariffs will "definitely" be on the table and the issue is "impossible to avoid." But the state-backed news outlet also acknowledged trade issues won't be the focus of the meeting, which is "more about the general diplomatic relationship." Tech on tap: Technology isn't totally off the table, though. "We will communicate that the United States is going to take steps in terms of what we do on technology to ensure that our technology is not being used in ways that are inimical to our values or adverse to our security," Sullivan added. That statement came after Reuters reported that the U.S. has extended review times for American companies trying to sell components to Chinese chipmaker SMIC. The Trump administration put that tech firm and others on the Commerce Department's trade blacklist, but had routinely approved waivers for the sale of all but the most advanced chips. Trade team still forming: Trade insiders in D.C. largely aren't alarmed at their issues falling down the priority list. The Senate has yet to confirm Trade Representative nominee Katherine Tai, they point out, which could happen as early as this week. The administration likely wants to avoid talking specifics on trade until Tai is in place, especially given concerns in D.C. trade circles that longtime Biden aides like Sullivan and Blinken could box the White House newcomer out of policymaking. GOP wants trade talks soon: Republican trade leaders say economic conversations should begin in earnest. House Ways and Means ranking member Kevin Brady on Friday urged Biden's team to push for "full compliance" with the phase one trade deal and quickly "move on to serious negotiations about phase two." "Phase two is about reaching agreement on a number of issues in the reduction of tariffs," Brady told reporters on a press call Friday. "I think that's where I'm interested in going, I think many of our members of Congress are as well, but those tariffs won't likely be reduced until we see more progress from China." USTR not cut out: Blinken added Friday that the Biden administration would bring its economic advisers to talks when the time is right. And while she hasn't officially started her job, Tai will likely be kept closely informed on the talks by USTR chief of staff Nora Todd, a former aide to Sen. Sherrod Brown (D-Ohio) who has a close relationship with the nominee. And the USTR staff likely have a seat at the table for interagency meetings in the run up to major trade summits, said one former agency staffer. 'Quad' agreement seeks to isolate China: The first China summit of Biden's term will come less than a week after his team moved to solidify ties with Beijing's regional rivals. On Friday, the U.S., Australia, Japan and India signed a symbolic alliance, labeling themselves a "Quad" of democratic nations committed to "promoting a free, open rules-based order," as well as promoting vaccine production and distribution in Asia. The Chinese government was unimpressed by Biden's push, with foreign ministry spokesperson Zhao Lijian saying nations should "refrain from forming closed and exclusive 'cliques.'" The editor of the Global Times was more blunt, saying the pact won't help "India encroach one inch of China's territory," or help "Japan drive away China's coast guard vessels." It is a "low-quality strategic construction" that "serves more as psychological comfort," he tweeted.   JOIN THE CONVERSATION, SUBSCRIBE TO "THE RECAST": Power dynamics are shifting in Washington, and more people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. "The Recast" is a new twice-weekly newsletter that breaks down how race and identity are recasting politics, policy and power in America. Get fresh insights, scoops and dispatches on this crucial intersection from across the country, and hear from new voices that challenge business as usual. Don't miss out on this new newsletter, SUBSCRIBE NOW. Thank you to our sponsor, Intel.     TIMELINE FOR MAJOR TRADE BILLS STILL UNCLEAR : Brady on Friday also complained that he's had virtually no communication with Democratic leadership on his committee about reauthorizing three major trade bills — the Generalized System of Preferences, Miscellaneous Tariff Bill, and trade promotion authority. "There have been no discussions in the house other than some basic staff discussions," Brady said on a press call. "The focus in Ways and Means has been on this so-called stimulus." TPA expedites the approval of trade deals in Congress and will expire in July, but Democratic trade leaders have said there's no rush to reauthorize it, particularly because the Biden administration has said it will pause new trade negotiations. The GSP and MTB, both trade waiver programs, expired at the end of last year after Democrats insisted on new labor and environmental provisions, but they so far have not moved either. "I don't see any problems in any of those three bills that can't be solved," Brady said. "I think we started in a more positive place on TPA than we have in past years and I'm hopeful we can build on that." The situation is much the same in the Senate, where a spokesperson for Finance ranking member Mike Crapo (R-Idaho) said the White House "has yet to indicate whether they want TPA renewed." If Democratic trade leaders have a game plan for reauthorizing, they aren't letting on. Leadership for both House Ways and Means and Senate Finance did not respond to requests for comment on the issue. DEMS URGE BUY AMERICAN WAIVER SUSPENSIONS IN COVID AID: More than a dozen Senate Democrats today wrote to the White House asking Biden to suspend waivers to the Buy American program for contracts funded by Covid-19 aid. Firms from 60 nations can currently bid for U.S. government contracts as if they were domestic companies, the senators wrote. Before contracts are doled out for the newly passed $1.9 trillion Covid package, the White House should suspend those waivers and "commit to our trade partners to renegotiate these terms as quickly as possible." "[T]his crisis has demonstrated the risks of long foreign supply chains," wrote the lawmakers, led by Brown and Tammy Baldwin (D-Wis.), referencing shortages for "crucial items like Personal Protective Equipment (PPE), ventilators, and chemical inputs for pharmaceuticals due to lack of domestic industries in those products." Biden has pledged to narrow exemptions to the Buy America rules and review supply chains for critical industries including PPE and pharmaceuticals, but those have not been detailed much beyond the issuance of executive orders. THE OECD'S NEW LEADER: Australia's former finance minister, Mathias Cormann, has been chosen to lead the Organisation for Economic Co-operation and Development. He steps into the role on June 1. Cormann bested former EU trade minister Cecilia Malmström of Sweden, who was the last remaining contender for the job. The U.S. candidate, Trump administration official Chris Liddell, withdrew in January. Cormann takes over as the OECD countries try to hash out a global agreement on digital services taxes that would directly affect American companies like Google and Facebook. The debate has stoked tensions between the U.S. and traditional allies like Canada, France, Italy and the U.K. As our colleagues at POLITICO Europe reported , Cormann's choice is controversial among climate change activists. They have raised concerns about his record of cutting emissions and taking other steps to mitigate global warming as an Australian politician. BUSY WEEK AHEAD AT ITC, WTO: Multiple items are on the agenda for U.S. and global trade bodies this week. On Monday, the ITC will vote on a sunset review for diamond sawblades from China. On Tuesday, it will have a hearing on imports of car chassis from China. Wednesday will bring a vote on countervailing duties on steel mesh from Mexico, Thursday a hearing on mattress imports, and Friday a preliminary hearing on imports of cherrypickers and other mobile access equipment from China. E-commerce and fisheries at WTO: WTO officials will also be busy, holding an e-commerce meeting on Tuesday. Then on Wednesday, members will restart negotiations on fisheries subsidies, aiming to come up with an agreement by the middle of the year, the target set by Director General Ngozi Okonjo-Iweala.   HAPPENING THURSDAY - PLAYBOOK INTERVIEW WITH CONGRESSMAN LEE ZELDIN : The GOP has not won a statewide election in New York in nearly two decades. Rep. Lee Zeldin (R-N.Y.), an ally of former President Donald Trump, is one of several Republicans considering a challenge against embattled New York Gov. Andrew Cuomo. Join Playbook co-authors Tara Palmeri and Ryan Lizza for a conversation with Rep. Zeldin to discuss a potential gubernatorial run and how he is working with Democrats in Congress. REGISTER HERE.     International Overnight — The China-EU investment deal cements Beijing's access to European media markets while keeping news blocked at home, POLITICO Europe reports. — The New York Times previews team Biden's Asia trip. — The Guardian takes a deep dive into the Australia-China trade relationship amid heightened commercial tensions between the nations. — Global arms sales held steady from 2016 to 2020 after increasing in previous decades, Reuters reports. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com; gbade@politico.com; soverly@politico.com; jyearwood@politico.com and pjoshi@politico.com. Follow us @POLITICOPro and @Morning_Trade.   Follow us on Twitter Pradnya Joshi @pjoshidc John Yearwood @john_yearwood Doug Palmer @tradereporter Gavin Bade @GavinBade Steven Overly @StevenOverly   Follow us

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