Trade to be part of Biden's China strategy, not driving force: ex-USTR official

Trade will be a part of President Joe Biden's overall negotiation policy with China, but it won't be the driving force in Sino-US relations, as it was under former President Donald Trump, a former official at the Office of the US Trade Representative (USTR) said on Wednesday.

"There are fundamental differences on a host of issues between the United States and China that will be difficult to resolve," Wendy Cutler, former assistant trade representative at the USTR, told the Reuters Global Markets Forum.

The Biden administration would be pressured to engage on trade in the Asia-Pacific region by pacts such as the Regional Cooperation Economic Partnership (RCEP) in Asia, and China's Comprehensive Agreement on Investment (CAI) with Europe, said Cutler, who is currently vice president of the Asia Society Policy Institute.

But she went on to say that taking the United States back into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which had excluded China, was not the only way to build ties in the Asia-Pacific region.

The CPTPP had been the centerpiece of former President Barack Obama's strategic pivot to Asia covering 11 countries across the Pacific, but Trump withdrew the United States from the pact in 2017 before it was signed.

"If the United States were to consider returning to the CPTPP, it would undoubtedly seek updates and revisions to the agreement, including those that are more responsive to the concerns of US workers," Cutler added.

Cutler said narrower, sectoral deals could instead provide a more viable alternative.

"They are relatively easier and quicker to do and could help rebuild trust and momentum while delivering results."

Cutler said the RCEP, signed between 15 Asia-Pacific countries, including China, in November 2020, needs to be taken seriously.

"RCEP establishes wide rules of origin that will facilitate trade among (member) countries, and over time, impact supply chains," Cutler said.

It also has a structure for engagement where issues between members can be addressed, she added.

The RCEP, widely seen as a China-supported alternative to the CPTPP and touted as the world's largest free trade agreement, aims to progressively lower tariffs and counter protectionism, boost investment and allow freer movement of goods within the region.

Cutler said she expected the United States to contribute to infrastructure investments in the Asia-Pacific region, though not at the scale of China.