Tariff, enforcement issues still hurdles to trade deal with China, says US Chamber of Commerce

(From left) US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin, Chinese Vice-Premier Liu He, and People's Bank of China governor Yi Gang, in Beijing on March 29, 2019. PHOTO: EPA-EFE

WASHINGTON (REUTERS) - Chances are increasing that the United States and China will secure a deal to end a costly trade war, though discussions this week will be critical to resolving stubborn differences over how the deal will be enforced and whether and when the US will lift hefty tariffs on Chinese goods, a top US Chamber of Commerce official said on Tuesday (April 2).

The two countries have been embroiled in a tit-for-tat tariff battle since mid-2018, costing the world's two largest economies billions and roiling global markets.

Negotiations between the two countries are due to kick off on Wednesday, with China's lead negotiator in Washington just days after wrapping up talks last week in Beijing.

The administration of US President Donald Trump has imposed import tariffs on Chinese goods to put pressure on Beijing to meet a long list of demands that would rewrite the terms of trade between the two countries.

The demands include changes to China's policies on intellectual property protection, technology transfers, industrial subsidies and other trade barriers.

This week, China's Vice-Premier Liu He will meet US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin to try to resolve US demands that China make sweeping changes to policies governing intellectual property protections, technology transfers, industrial subsidies and market access.

"We're getting to the point where it's clear that both governments want a deal. The presidents want a deal, and they need to get through the end-game issues. This is a critical week," Mr Myron Brilliant, the Chamber's head of International Affairs, told reporters on Tuesday.

Absent significant process this week on the "tricky" issues of tariffs and enforcement, the goal to complete a deal this month may be missed, Mr Brilliant said.

The Trump administration and American companies want structural IP and market economy issues addressed, with a way to ensure China follows through on its promises, he said.

US officials favour tariffs as a way to maintain leverage on China and ensure those obligations are met. But it is unlikely that China would agree to an enforcement mechanism that included re-imposition of unilateral US tariffs without the current tariffs being removed, Mr Brilliant said.

The continued threat of tariffs hanging over commerce would mean a deal would not end the risk of investing in businesses or assets that have been affected by the trade war.

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