MNI EXCLUSIVE: China Eyes US Talks, May Waive Tariffs:Advisors

China is better prepared for trade discussions with the U.S. after making crucial concessions in the recent pact with the EU and could show goodwill by exempting more American products from tariffs in the hope of reciprocity and dialogue, policy advisors told MNI.

Chinese officials have on several occasions acknowledged the pressing need to reopen communication channels, especially on trade, that seized up in the final stretch of the Donald Trump administration.

Although incoming President Joe Biden has said he won't act on tariffs before fully assessing the impact of Phase One of the trade deal, providing some breathing space, Beijing advisors think China should be proactive and take advantage of the momentum from the EU investment pact and economic growth to extend an olive branch to Washington.

"What China has offered the EU it can definitely offer the U.S.," said Lu Xiang, a U.S. expert at the Chinese Academy of Social Sciences. The U.S. and the EU have the same concerns on issues such as subsidies for state-owned companies and greater access to the Chinese market. So, if China and the EU can reach agreement, why can't China and the U.S. do likewise?" Lu said.

WAIVERS

Besides greater transparency on subsidies, China has also pledged protection for labour and made commitments related to sustainable development in the EU investment pact, which could be viewed favourably by a Democratic administration, advisors said.

In terms of tariffs, "we can move before the U.S.," said Tu Xinquan, the dean of China Institute for WTO Studies at the University of International Business and Economics. "We could encourage our companies to apply for waivers," from the Chinese government, he added.

Both the U.S. and China have a system for tariff waivers based on submissions by companies although other imperatives have also played a role.

Since February last year, Beijing has waived tariffs on a range of U.S. imports, including soybeans, pork, precious and base metal ores, and niche chemical products such as petroleum wax. Some were to help meet purchase quotas under the trade deal but in other cases, China's State Council gave no reason.

As for the U.S., the Trade Representative's Office has exempted imports of Chinese medical products such as masks and hand sanitisers from tariffs following the pandemic. But exclusions for many other products ceased at the end of 2020 with advisors in Beijing blaming the leadership transition for the lack of action.

Lu expects economic pressures to soften the U.S.' stance. U.S. demand for imports has increased sharply at a time when China's manufacturing is leading the recovery and other economies are still catching up, so China will be the sole supplier for many products for some time, he said. Tariffs would harm the U.S. economy more than the Chinese economy, he added.