The administration of US President Joe Biden would prioritize domestic investments in workers and infrastructure before embarking on any new free trade agreements, said Janet Yellen, Biden’s nominee for US secretary of the treasury.
A copy of her written responses to lawmakers’ queries after her confirmation hearing on Tuesday showed that Yellen also promised a comprehensive review of China’s implementation of a Phase 1 trade deal.
Washington would work more closely with allies to address “abusive” practices by the world’s second-largest economy, she said.
The US Senate’s Finance Committee was to meet yesterday to vote on the nomination of the former US Federal Reserve chair, paving the way for a potential vote by the full Senate later yesterday or early next week.
Asked about a possible trade deal with Taiwan, Yellen said: “President Biden has been clear that he will not sign any new free trade agreements before the US makes major investments in American workers and our infrastructure,”
“Our economic recovery at home must be our top priority,” she said.
At the same time, the new administration planned to pursue “a robust trade agenda” and vowed to work closely with Biden to “reach out to our allies, rebuild bridges and pursue trade agreements that support American prosperity and put workers first,” she said.
Yellen said that the Biden administration would undertake a comprehensive review of all aspects of former US president Donald Trump’s trade policies toward China, including Beijing’s implementation of the interim trade deal signed in January last year.
“We will review the [US] tariffs on China and consult with our allies, and will not be making changes until we do both of these things,” Yellen said, adding that the Biden administration aimed to use its “full array of tools to counter China’s abusive economic practices and hold Beijing accountable.”
Chad Bown, a fellow at the Peterson Institute for International Economics, on Thursday said his analysis showed that China’s purchases of US goods last year fell 42 percent short of the commitment Beijing made in the deal.
“As part of his review, [Biden] is going to consult with allies to galvanize collective pressure. We need an approach that actually brings meaningful pressure on China,” Yellen said.
Asked about whether Biden’s proposed increase in the corporate tax rate would harm the competitiveness of US companies, particularly with regard to China, Yellen said that any increase would be coupled with “massive investment” that would benefit US businesses.
Biden’s proposal to increase the corporate tax rate to 28 percent — the midpoint of the pre-2017 level and the rate imposed after Trump’s tax cut — would still leave it “substantially below the level that had been in place for decades.”
Yellen, who would be the first treasury secretary to serve as a statutory member of the White House National Security Council, vowed to crack down on terrorist financing networks and pledged a “rigorous” review of any foreign investments, also with the help of allies.
“If such coordination does not succeed, the Treasury Department should be prepared to strongly urge other nations to join us in targeting dangerous terrorists and proliferators, and expose their complicity if necessary,” Yellen said, adding that China must not be allowed to violate US sanctions.
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