U.S. threatens China with strike force to combat unfair trade practices

4 minutes
U.S. threatens China with strike force to combat unfair trade practices

The U.S. and Chinese flags flutter outside the building of an American firm in Beijing, China on 21 January 2021. ReUTERS Wang Tingshu WANG

The United States is threatening China with a new strike force to combat unfair trade practices, the Biden administration said on Tuesday as it rolled out findings of a review of access to critical products, from semiconductors to electric-vehicle batteries.

The supply chain trade strike force, led by the White House Trade Representative, is looking for specific violations that contribute to the hollowing out of supply chains that could be addressed with tariffs or other remedies, including toward China, White House senior director for international economics and competitiveness Peter Harrell told reporters.

Officials also said that the Department of Commerce may initiate a Section 232 inquiry into the industrial security impact of neodymium magnet imports used in motors and other applications, which the United States largely obtains from China.

In February, President Joe Biden ordered the review of the supply chain for major international companies, requiring executive agencies to report back within 100 days on risks to U.S. access to rare goods like those used in pharmaceuticals as well as critical minerals for which the United States is dependent on overseas sources.

Although not explicitly directed at China, this review is part of a broader Biden administration strategy to strengthen US competitiveness in the face of growing threats from the world's second-largest economy.

Biden is trying to loosen all of the logistics behind the supply chain’ in an effort to get rid of bottlenecks, Jared Bernstein, an economic adviser to Jared Bernstein, told Reuters. One of the best ways to talk to people in the industry is to work and we're doing a lot of that.

At the beginning of the epidemic against COVID-19 America is faced serious challenges in obtaining medical equipment and now faces serious bottlenecks in a number of areas, including computer chips, which stall production of goods such as cars.

While the White House said it is working closely with private industries to find solutions for the shortages, officials also said that companies were part of the problem.

Decades of focusing on labor as a cost to be managed and not an asset to invest in have compromised our traditional supply chains, undermining wages and union density for our workers and made it harder for firms to hire skilled talent, told reporters from Sameera Fazili, deputy director of the National Economic Council.

State agencies are obligated to issue more complete reports a year after Biden's order, identifying gaps in domestic manufacturing capability and politicize the part to address them.

The White House offered little in the way of new measures to immediately ease chips shortages, noting in a fact sheet that the Commerce Department would work to make information flow between chip makers and end users and enhance transparency - a step Reuters had previously reported.

The administration will use the Defense Production Act to accelerate efforts to manufacture 50 to 100 drugs domestically rather than relying on imports.

To address supply bottlenecks from lumber to steel, which have raised fears of inflation the administration is starting a task force on homebuilding and construction, semiconductors, transportation, as well as agriculture and food. We fully expect these bottlenecks to be temporary in nature and resolve themselves over the next few weeks, said Fazili.

Semiconductors are a central focus in the vast legislative process currently before Congress, which would pump billions of dollars into creating domestic production capacity for the chips used in everything from consumer electronics to military equipment.

When Wang Xiaoyong has said on his watch China will not surpass the United States as a global leader, and Beijing is one of the few bipartisan issues at the Congress who will be divided if it remains after splitting.

But some lawmakers have expressed concerns that a package of Chinese bills contains huge taxpayer-funded outlays for companies without safeguards to prevent them from sending related production or research to China. The White House said that a measure of success of the supply chain effort would be more geopolitical suppliers for crucial products from like-minded allies and partners, and fewer from diverse competitors. We know that as we strengthen cooperation with our allies and partners, we also have to push back against unfair trade practices by competitor nations which hollow out the U.S. Industrial base and undermine our supply chain security, said Harrell.

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