US, China working to finalise phase one of trade deal: Mnuchin

WASHINGTON/BEIJING • American and Chinese officials will hold talks by phone this week and next as they work to finalise the "phase one" trade deal announced last week, US Treasury Secretary Steven Mnuchin said yesterday.

President Donald Trump last Friday hailed the breakthrough agreement, but said it would take several weeks to finalise the details before he signs a pact with Chinese leader Xi Jinping next month.

There are few specifics, and the deal does not roll back the tariffs already imposed on hundreds of billions of dollars in trade between the two dominant economic powers.

But Mr Mnuchin indicated the next round of new tariffs due to hit consumers on Dec 15 could be scrapped once the deal is signed.

He pushed back on the scepticism about the deal in an appearance on CNBC, saying: "There is a fundamental agreement in principle. There are still some issues that need to be worked out in wording but I would say we have every expectation phase one will close."

He said deputy-level officials will hold discussions by phone this week, while he and US Trade Representative Robert Lighthizer will have a call with China's trade envoy, Vice-Premier Liu He, next week. Senior officials will then meet in Santiago, Chile, on the sidelines of the Apec meeting, before the summit where Mr Trump and Mr Xi are expected to sign the pact.

The initial deal, which finally breaks an 18-month trade spat, included a huge rise in China's purchases of US farm products, and also covers intellectual property, financial services and currencies.

Mr Mnuchin also said the two sides had agreed on "real enforcement mechanisms" in case further disagreements arise between Washington and Beijing over the terms.

Bloomberg had earlier in the day reported that China wanted further talks as soon as the end of this month to hammer out the details.

 
 
 
 

Beijing may send a delegation led by Mr Liu to finalise a written deal, one source said. Another said China wants a planned tariff hike in December to be scrapped, in addition to the hike scheduled for this week.

Mr Trump last week lauded the Chinese side for agreeing to make purchases of US$40 billion to US$50 billion (S$55 billion to S$68 billion) in US agricultural goods, doubling the amount China spent on American farm goods in 2017.

While he hailed this increase as "the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country", China's state-run media only said the two sides "agreed to make joint efforts towards eventually reaching an agreement".

Agriculture industry analysts say China is still a long way from doubling spending on US farm goods, cautioning that getting there is contingent on removing substantial technical and political hurdles.

Mr Darin Friedrichs, senior Asia commodity analyst at brokerage INTL FCStone in Shanghai, told Reuters: "I think it's a meaningless big number, thrown out to get headlines, and won't happen."

For China to boost purchases so substantially will depend on further progress on other, more thorny, issues still to be dealt with in the talks, say analysts.

AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS

 
A version of this article appeared in the print edition of The Straits Times on October 15, 2019, with the headline 'US, China working to finalise phase one of deal: Mnuchin'. Print Edition | Subscribe