ZCZC
BFF-02
US-CHINA-TRADE-ECONOMY-TARIFFS
Trump gives US-China trade talks another four weeks
WASHINGTON, April 5, 2019 (BSS/AFP) – President Donald Trump on Thursday
said the United States and China were a month from a potentially “epic” trade
agreement.
But, nine months into the two countries’ trade war, the announcement was
anti-climactic, as the White House had earlier stoked anticipation that Trump
could announce a date for a summit to clinch a final deal with his Chinese
counterpart Xi Jinping.
Global markets had also rallied in recent days, roused by the hope that an
end to the skirmish between the world’s two top economies was at last at
hand.
“We will probably know over the next four weeks. It may take two weeks
after that,” Trump told reporters following a meeting with Beijing’s trade
envoy Liu He.
“It’s looking very good.”
The talks are due to continue for a third day on Friday. Trump had said as
far back as February that a summit could occur within a month.
Despite Trump’s rosy gloss on the talks on Thursday, US Trade
Representative Robert Lighthizer told reporters that major issues were left
to be resolved.
Both US and Chinese officials have projected cautious optimism for months,
but the last mile is proving to be the hardest, with the two sides reportedly
tussling over whether and when Washington should remove the punishing tariffs
it imposed last year on Chinese goods.
Trump in early 2018 launched a trade war with China, seeking to slash that
country’s soaring trade surplus with the United States, end alleged unfair
trade practices such as the theft of American technology and China’s massive
state intervention in markets.
Washington and Beijing since last year have imposed tariffs on more than
$360 billion in two-way trade, biting into their manufacturing sectors as the
world economy slows.
China has floated offers to make sizable purchases of US commodities and
taken steps to show it will protect foreign intellectual property.
But Democrats have warned of the temptation to accept a superficial deal
that does not extract profound changes to the Chinese industrial policies
American officials have long denounced.
Trump reiterated Thursday however that, “if it’s not a great deal, we’re
not doing it.”
Chinese state media later carried a report which said Xi has called for the
talks to conclude as soon as possible.
“I hope the two sides of the economic and trade teams will continue to
resolve both sides’ issues of concern in the spirit of mutual respect,
equality, and mutual benefit, and finish negotiations on the China-US
economic and trade agreement document as soon as possible,” Xinhua quoted Liu
as saying, as he conveyed a message from Xi to Trump.
– A tariff compromise? –
A final sticking point appears to be when and how Washington will agree to
lift the steep tariffs it has placed on more than $250 billion in Chinese
imports.
Last month, Trump said the tariffs would stay in place for “a substantial
period,” although whether this would apply to both tranches of goods
subjected to the new duties was unclear.
US officials demand that any agreement have teeth and Lighthizer, the US
trade representative, has said tariffs offer crucial leverage should Beijing
backslide on its commitments.
Gary Clyde Hufbauer, a former US trade official and senior fellow at the
Peterson Institute for International Economics, said lifting the tariffs too
early could encourage criticism from Democrats that he had gone soft in the
negotiations.
“The White House response to this drama is to keep the tariffs and only to
slowly lower the rate as the Chinese fulfill their commitments,” Hufbauer
told AFP.
“The Chinese strategy is to have them get rid of it,” he said. “My guess is
that something in between will be in the compromise.”
Analysts say any agreement is likely to include banner announcements that
China has agreed to increase purchases of American commodities like soybeans
and fuel.
This could perversely serve to give Chinese state enterprises a greater
market role while making US exporters more reliant on the Chinese
government’s purchasing decisions — both possibly contrary to US objectives
and interests.
William Reinsch, a trade expert at the Center for Strategic and
International Studies and former Commerce Department official for exports,
pointed to Beijing’s boycott of US soybean exports last year.
American producers could struggle to fill major new orders announced by
Beijing, he said.
“The only way they can buy every bean is if we stop selling to everybody
else and that puts us in an enormous position of vulnerability,” he said.
BSS/AFP/GMR/0811 hrs