The Office of the U.S. Trade Representative is accepting comments through July 10 that will “inform the development of negotiations with China aimed at optimizing bilateral trade in non-sensitive products.”
“As long as China maintains its non-market policies and practices and refuses to provide reciprocal treatment to U.S. exports—such as disregard for intellectual property rights, subsidies and other industrial policies creating systemic overcapacity and overproduction in industrial sectors, diverse and deeply entrenched market access barriers, and lack of regulatory transparency—the United States likely will continue to rely on tariffs and other tools to manage trade with China,” USTR said.
However, the U.S. and China also intend to identify non-sensitive products and reach agreement to modify certain non-MFN tariffs imposed on those products by each other. USTR said “additional tariffs imposed through certain U.S. authorities [e.g., Section 232 and Section 301] could be favorably modified as a result … provided that any modifications would not conflict with U.S. law or economic or national security interests, and that any conditions related to tariff modifications are satisfied.” Similarly, China would be expected to modify tariffs it has imposed on imports from the U.S.
USTR is therefore seeking comments on the following topics.
- which types of Chinese products, or Chinese products in particular sectors, should be considered non-sensitive (i.e., they give rise to few, if any, issues related to economic and national security and supply chain resilience risks)
- which products of China that are currently subject to additional U.S. tariffs the U.S. should import at lower tariff rates (e.g., MFN rates), whether such additional tariffs have resulted in a tariff inversion (i.e., the tariff is higher on a given manufacturing input than on the downstream finished product), and China’s share of U.S. imports of such products
- which, if any, U.S. consumers and workers would benefit from or be harmed by such tariff modifications
- which U.S. products currently subject to additional Chinese tariffs U.S. exporters should be able to sell to the Chinese market at China’s MFN rates and whether any such products are covered by and listed in Annex 1 of the WTO Agreement on Agriculture, an industrial product the export of which to China has declined significantly in recent years, or a product subject to multiple Chinese tariff actions or exceptionally high Chinese tariffs
- any U.S. products currently subject to Chinese tariffs above the applicable MFN rates whose exports to China have not been significantly affected by those tariffs or for which China appears to be reliant on U.S. exports
USTR is also interested in input on the U.S.- China Board of Trade, a government-to-government channel for discussions on how to manage bilateral trade of non-sensitive products (including tariff modifications) that “will function as an ‘adapter’ mechanism to promote reciprocity, durability, and balance in the U.S.-China trade relationship.” Topics that may be addressed include (1) how frequently this body should meet, (2) how it should assess when and whether to modify the composition or scope of the identified non-sensitive products, and (3) what mechanism should be established to ensure the effective sharing of trade data to allow for the optimal functioning of the board.
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