Biden Trade Chief Says Xi Meeting Sends Powerful Signal to World

(Bloomberg) -- The face-to-face meeting between US President Joe Biden and Chinese President Xi Jinping was a powerful signal to the rest of the world that both leaders can manage ties, according to US trade chief Katherine Tai.

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“It’s a really good thing, it’s really important” that the talks took place, Tai told the Bloomberg New Economy Forum in Singapore on Tuesday.

“The body language was very powerful from the photos of the two leaders greeting each other and standing together,” she said. “That’s a powerful signal to the rest of the world in terms of two leaders who are capable of managing a tremendously complex relationship.”

Further discussions between both sides will continue, Tai said.

“The two leaders have tasked their senior officials to continue to communicate and we are looking forward to building on the open and candid conversations that we have been having with our counterparts in Beijing,” she said.

Tai spoke after after Biden met Xi on Monday night at a seaside resort in Bali for talks that exceeded low expectations. The US said the two sides would resume cooperation on issues including climate change and food security, and that Biden and Xi jointly chastised the Kremlin for loose talk of nuclear war over Ukraine.

On the Indo-Pacific Economic Framework, an economic agreement that the US is negotiating with 13 other countries, Tai said negotiations are going well and that agreement is possible within the next two years.

IPEF is the most significant US economic engagement in the region since former President Donald Trump abandoned the Trans-Pacific Partnership, negotiated under former President Barack Obama. But some lawmakers and business executives have criticized Biden’s IPEF for stopping short of reducing tariffs -- something accomplished by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a successor to the TPP that does not include the US.

US allies in Asia would also have preferred a more traditional trade deal that offered greater access to US markets, but are considering the IPEF as the Biden administration’s offer.

“We are now looking at the first engagement of our senior officials to get together for the first negotiating round in Australia in a couple of weeks at the beginning of December, that all of this momentum that we’ve generated, is certainly thanks to a tremendously strong partnership that we have had in this region, in particular from Singapore,” Tai said. “So going into 2023 we are extremely excited.”

Still, she also cautioned that the world economy is going through a lot of changes, meaning negotiations on IPEF will continue to evolve.

Even after the talks between Biden and Xi, Tai was reserved on the potential for any removal of US tariffs on Chinese goods.

Read More: Biden, Xi Take Biggest Step in Years to Avoid US-China Clash

Biden has been holding back on a decision to scrap any Trump-era tariffs on China imports. The duties, which began piling up in 2018, span imports from industrial inputs, such as microchips and chemicals, to consumer merchandise including apparel and furniture. Senior administration officials have said reducing tariffs on household items could help ease a surge in the US cost of living.

Trump imposed the duties using section 301 of the Trade Act of 1974. US law states that the tariffs automatically expire four years after they were imposed, but on the eve of their sunset earlier this year, the USTR got hundreds of requests for them to remain, which is the case as it undertakes a review.

While the tariffs on Chinese goods are a holdover from Trump’s aggressive actions against Beijing, the Biden administration has kept them in place as a kind of leverage against what the US sees as its key strategic and economic rival.

“So those tariffs remain in place because the underlying issues are still there,” Tai said. “We’ve not got resolution yet. We will continue to press.”

US-China trade tensions further escalated this year after the US announced sweeping curbs on the sale of semiconductors and chipmaking equipment in China.

(Updates throughout with additional Tai comments, background)

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