YELLEN TRIP RECAP: Yellen said she wanted diplomatic and economic talks between the two countries to become more regular and less notable in contrast to the recent drama and uncertainty over whether the two sides would even meet. “Over the past two years, there has been significant public coverage of meetings between our two sides, including my and Secretary [Antony] Blinken’s visits to China,” Yellen told reporters Sunday at the close of her trip. “My hope is that we can move to a phase in our relationship where senior-level diplomacy is simply taken as a natural element of managing one of the world’s most consequential bilateral relationships.” Morning Trade suspects it will be a long time before the world’s media treats high-level talks between the United States and China as strictly ho-hum. Still, Yellen said she hoped her visit, “which totaled about 10 hours over two days, served as a step forward in our effort to put the U.S.-China relationship on surer footing.” The U.S. Treasury chief met with Chinese Premier Li Qiang, who is second in command to President Xi Jinping; her direct counterpart, Vice Premier He Lifeng; finance minister Liu Kun; and the head of the People’s Bank of China, Pan Gongsheng. The trip yielded no immediate breakthroughs on irritants such as U.S. tariffs or China’s non-market economy practices, but Yellen said it could “help build a resilient and productive channel of communication with China’s new economic team.” The big takeaway, as POLITICO’s Zach Warmbrodt put it on Sunday: The U.S. believes the world’s two largest economies can have a constructive relationship despite their geopolitical tensions, including over U.S. export controls for high-tech goods. Export controls: In a separate interview with CBS’ “Face the Nation,” Yellen again expressed concern about China’s new export controls on two critical minerals that the European Union and other countries criticized Friday at the World Trade Organization. China’s move could be simply “retaliatory,” in contrast to U.S. export controls, which “are narrowly targeted to address national security concerns,” she said. Outbound investment: She also indicated it could be a while before President Joe Biden issues a long-awaited executive order to restrict U.S. investment in China in certain high-tech sectors such as artificial intelligence and quantum computing, if he does at all. “It's still something being discussed in the administration and the timing of it is not yet certain,” Yellen said. “But I wanted to explain to my Chinese counterparts that if we go forward with this executive order, that we will do so in a transparent and narrowly targeted way.” Yellen was then asked if the EO could be dropped altogether. “Well, no final decision has been made. But as I've said previously, this is something we're looking at very carefully,” she said. Despite Yellen’s coyness, other signs indicate it’s more of a question of when, than if. Business interests from K Street to Wall Street have been on pins and needles for months awaiting the order, and the latest word from them is that the order is nearly final and could be issued in the next few weeks. Mike Pyle, an economics hand on the NSC, said before the July Fourth holiday that the administration had been consulting with allies for most of the spring and that was the cause for continued delay. DeSantis chimes in: Florida Gov.Ron DeSantis, in an interview Sunday with Fox News, said he would take steps to revoke China's permanent normal trade relations status if he won the 2024 White House race. "I favor doing that. I think we probably need Congress but I would take executive action as appropriate to be able to move us in that direction," DeSantis said. BACK FROM MEXICO: Our Canadian colleague Nick Taylor-Vaisey talked with Canadian Trade Minister Mary Ng as she departed the third annual meeting of the USMCA Free Trade Commission meeting with U.S. Trade Representative Katherine Tai and Mexican Economy Secretary Raquel Buenrostro. Home shopping: Tai again called on Ng to allow American home-shopping channels to operate in Canada — a USMCA commitment. Ng pledged a resolution in — cue vague government-speak — "due course." "This is something we've been working with Heritage Canada on to make sure that the way in which it comes into Canada sort of just works. Without getting into all of the technical details of it, which is what it is, what I did was I reassured her that we are well advanced." Auto rules of origin: In December, Canada and Mexico won a USMCA panel ruling on the formula that decides how much of a manufactured vehicle is North American-made. Americans haven't implemented the ruling. Ng told Playbook last week the issue is "top of her desk," and her readout made mention of the thorny issue. Suffice to say, not much progress was made. "Nothing more substantive than what I shared the other day," the minister said. The Free Trade Commission meeting agenda was mostly focused on other priorities, including supply chain resiliency. Tai's readout pledged "regular communication" with Ng and a look at their schedule indicates that is already the case. They met in May at APEC meetings in Detroit and June at the World Trade Organization mini-ministerial in Paris. They'll see each other again in August at G-20 ministerial meetings in Jaipur, India — and then in Osaka, Japan, for the G-7 in late October. They're also texters. "If there's an issue that I need a quick response to, she and I easily text one another or just, you know, put in a call,” Ng said. Unsighted: As of Sunday, there was still no joint statement or USTR readout of the trilateral meeting on Friday. But we expect that could still be coming. BIDEN IN EUROPE: President Joe Biden is scheduled to meet with U.K. Prime Minister Rishi Sunak and King Charles today as he makes a brief stop in London on his way to the NATO Summit in Vilnius, Lithuania. The visit is a reminder that Biden and Sunak agreed to negotiate a critical minerals pact one month ago even though we haven’t heard much about that since then. This will be Biden and Sunak’s sixth meeting in six months, and Biden’s first visit to No. 10 Downing St., the prime minister’s office and residence, according to the White House. “On Wednesday, he will deliver a major speech highlighting how the United States, alongside our allies and partners, is supporting Ukraine, defending democratic values and taking action to address global challenges,” White House spokesperson Karine Jean-Pierre said. IPEF FOURTH ROUND UNDERWAY: The fourth round of talks on the proposed Indo-Pacific Economic Framework began Sunday in Busan, South Korea, as negotiators strive to make progress toward a final deal by the time President Joe Biden hosts the Asia-Pacific Economic Cooperation leaders summit in San Francisco in November. The 14 countries participating in the talks completed a supply chain agreement in May under Pillar Two of the negotiations. But that still leaves three other pillars left to finish: Pillar One, covering an array of trade concerns; Pillar Three, covering clean energy and climate friendly technologies; and Pillar Four, covering anti-corruption measures and tax initiatives. ‘Agnostic’ pact: The supply chain agreement creates three new bodies focused on preventing or minimizing disruptions: a council to enact joint policy actions, a network to communicate in a crisis and an advisory board to address labor shortages and workers’ rights. The pact is “sector agnostic,” meaning it could come into play in different sectors at different times, since it’s impossible to predict exactly when and where the next disruptions will occur, Sharon Yuan, the Commerce Department’s chief IPEF negotiator, recently said. Refresher course: IPEF ministers laid out their hopes for the three remaining pillars in a joint statement at the end of their recent meeting in Detroit. My colleague Steven Overly also put together this state-of-play on the negotiations for POLITICO Pro subscribers. Former Deputy USTR John Veroneau, who served in the Bush administration, criticized the direction of the negotiations in a piece published last week by Nikkei Asia and warned of waning interest in the initiative from the business community. Oh, snap!: “At the last round of IPEF talks in Singapore in May, U.S. officials emphasized that the IPEF will not be a free trade agreement, but were hard pressed to say what it is,” Veroneau wrote. “Support from key U.S. business groups is now wavering, leaving anti-trade ideologues as the loudest voices still talking about the IPEF.” REPUBLICANS TO HONE TRADE ATTACK AT MINNESOTA HEARING: Republicans on the House Ways and Means Committee are expected to use a field hearing today in Kimball, Minn., to amplify their criticism of President Joe Biden’s trade policies. What to expect: “The Ways and Means Committee will explore how the Biden Administration’s failure to strictly enforce our trade agreements, especially USMCA and holding China accountable for agriculture purchase commitments, has impacted U.S. farmers and workers,” the committee said in an advisory sent around to reporters. And this: “The Committee will explore how the Biden Administration has tied the hands of American miners with unnecessary red tape while increasing our reliance on minerals from bad actors, including Chinese state-owned enterprises and countries that use forced labor,” the Ways and Means advisory said. Today’s Ways and Means hearing is the fifth outside Washington since Rep. Jason Smith (R-Mo.) became chair of the panel in January. Four of the five witnesses scheduled to testify today represent Minnesota’s agricultural sector, including dairy and cattle. The fifth is former Minnesota Senate Democrat Leader Tom Bakk, who the committee describes as a minerals expert. “The Ways and Means Committee is focused on examining how best to ensure strict enforcement of all our existing trade agreements, expand access to new markets for American farmers, and secure America’s supply chains, especially when it comes to critical minerals that can be produced here at home in states like Minnesota,” Smith said in a statement. NGOZI IN D.C.: WTO Director-General Ngozi Okonjo-Iweala is the keynote speaker Tuesday at this year’s Global Services Summit hosted by the Coalition of Services Industries. Matt Murphy, the State Department’s senior official for APEC, will also give an overview of what to expect for the remainder of the United States’ host year.
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