August 5, 2021

The Honorable Janet Yellen
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC, 20220

The Honorable Katherine Tai
United States Trade Representative
600 17th Street NW
Washington, DC 20508

Dear Secretary Yellen and Ambassador Tai:

On behalf of the undersigned organizations, we write to express our support for continued engagement with China on trade and economic issues, including full implementation of the U.S.-China Phase One Trade Agreement (“Phase One”), and swift action to address the costly and burdensome tariffs and retaliatory tariffs. We support the Biden Administration holding China accountable to its Phase One commitments, and we strongly urge the Administration to work with the Chinese government to increase purchases of U.S. goods through the remainder of 2021 and implement all structural commitments of the Agreement before its two-year anniversary on February 15, 2022.

The Chinese government has met important benchmarks and commitments made in the agreement that benefit American businesses, farmers, ranchers, and workers. For example, the commitment by China to open up its markets to U.S. financial institutions – and other U.S. financial service providers – reflects a hard-won U.S. achievement, and years of work by administrations of both parties. The chapter 3 commitments have been good for American agriculture, addressing most long-standing market access barriers. China has removed market access barriers for some U.S. fruits and grains and for nearly all U.S. beef products, as well as expanded its list of U.S. facilities eligible to export beef, pork, poultry, seafood, dairy, feed additives, and infant formula to China, among other actions. However, there is more work to be done by both governments to ensure that China meets its existing purchase commitments, including purchases of American ethanol. The commitments also did not include some of the most competitive U.S. goods exports to China, such as US lumber and chemical industry exports. Additional work is also needed to ensure that China fully implements outstanding structural commitments, particularly in the areas of biotechnology, patent linkage, services (including financial services), and protection of intellectual property rights.

The Phase One agreement did not address some of the significant challenges identified in USTR’s Section 301 investigation of China, nor many of the core structural economic concerns in the relationship. Longstanding issues remain unaddressed, including state subsidies; procurement by government and state-owned enterprises; cybersecurity, digital trade, and data governance; services issues; competition policy; regulatory data protection for new drugs, biological products, and other items; Chinese domestic standards-setting; outstanding agriculture policy issues; and continued market access barriers for U.S.-manufactured goods. Many of these topics were reserved for future talks, assuming successful implementation of Phase One. By fully implementing the structural commitments in Phase One and returning to the negotiating table, we are hopeful that progress can be made on these many outstanding concerns.