High-Level U.S.-China Trade Talks to Resume in Final Push for Deal03/20/2019
Negotiators for the U.S. and China have scheduled a new round of high-level trade talks in Beijing and Washington, aiming to close a deal by late April to end the yearlong dispute between the world’s two largest economies.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to fly to Beijing next week to meet with Chinese Vice Premier Liu He, Trump administration officials said. The following week, a Chinese delegation led by Mr. Liu is expected to continue talks in Washington, the officials said.
People tracking the negotiations said the talks appear to be in their final stages, following a rocky patch after Chinese leaders were unnerved by President Trump’s decision to abruptly break off nuclear-disarmament talks with North Korean leader Kim Jong Un in February.
“We’re in the endgame,” said Myron Brilliant, executive vice president of the U.S. Chamber of Commerce.
If the two sides continue to make progress, he said, they should be able to finish a trade deal by the end of April—or about one month later than previously expected.
The two sides are aiming for a package deal that includes substantial increases in U.S. exports to China, and Chinese pledges to boost protection of intellectual property, end pressure on U.S. companies to transfer technology to their Chinese partners and reduce subsidies for Chinese firms.
But the two sides still have important issues to resolve including how to enforce a deal and the pace at which the U.S. and China will roll back the tariffs imposed over the past year. The U.S. has levied tariffs on $250 billion of Chinese goods, covering about half the value of Chinese exports to the U.S. Beijing has retaliated with tariffs on $110 billion of U.S. goods, about 90% of U.S. exports to China.
Mr. Trump vowed last week to walk away from a deal he considered insufficient. But behind the scenes, the president has been pressing Mr. Lighthizer to finish a deal, people familiar with the discussions said.
“When can you get a deal done?” Mr. Trump asked the trade representative in a March 12 exchange, these people said. “Two or three weeks,” Mr. Lighthizer replied. Earlier in the day, Mr. Lighthizer had told the Senate Finance Committee, “Our hope is we are in the final weeks of an agreement.”
A deal also appeared to be at hand late in February. U.S. negotiators were optimistic that a pact could be sealed at a summit between Mr. Trump and Chinese President Xi Jinping at Mr. Trump’s Mar-a-Lago estate in Florida by the end of March.
That timetable unraveled after Chinese negotiators saw red flags in the failed Hanoi summit between Messrs. Trump and Kim. They feared Mr. Trump could press their leader with take-it-or-leave it demands at Mar-a-Lago, and concluded that a deal should be locked down before the two leaders met face to face.
In addition, the two sides have been negotiating the text in English, creating a delay as language had to be translated into Chinese. Mr. Liu also had limited authority, forcing him to seek approval of deal provisions from Mr. Xi and other senior Communist party officials, those following the talks said.
“There should have been an agreed-upon Chinese text before Liu He left Washington” in the last round of talks in late February, said Michael Pillsbury, a China scholar at the Hudson Institute who consults with the White House on trade.
Negotiators for China and the U.S. are still working to resolve one of the most stubborn sticking points: how to ensure China makes good on its promises to ease burdens on U.S. companies operating in China.
Mr. Lighthizer has sketched out key provisions in Congressional testimony, describing a protocol in which the two sides would hold consultations on disputes, starting with lower-level officials. If those officials didn’t resolve the problem, Messrs. Lighthizer and Liu would get involved. If no agreement is reached, the U.S. could impose tariffs, Mr. Lighthizer has said.
But he hasn’t publicly discussed another U.S. priority—that China agree not to retaliate against U.S. tariffs imposed for violations of the pact, at least in some circumstances. Beijing hasn’t approved that request.
Another big issue is the pace at which the two sides would remove tariffs now in force. The U.S. wants to roll them back slowly, after China reaches certain milestones. Beijing wants the tariffs quickly lifted.
U.S. negotiators have divided the tariffs into two kinds. They are more willing to roll back the 10% tariffs on $200 billion of Chinese goods, which took effect in September as the U.S. tried to put more pressure on China—or at least some of those levies..
But they want to keep in place the 25% on $50 billion of Chinese goods levied, in two stages, in July and August. Those tariffs was meant to compensate the U.S. for what the White House calculated was the harm to U.S. companies caused by China’s forced technology transfers.
The U.S. is also pressing China to ease its restrictions on cross-border data flows, people familiar with the negotiations said. Those talks include permitting U.S. companies to set up cloud computing operations in China and market their services there, rather than being limited to licensing technology to Chinese firms. Negotiations on those subjects are moving slowly, the people involved said.
Source: Bob Davis, The Wall Street Journal