Want deal? Remove tariffs first, China tells US

VIDEO: REUTERS

Beijing firm ahead of resumption of trade talks but US official says duties won't be lifted

The US must remove existing tariffs on Chinese goods if the two countries are to reach a trade deal, China said yesterday after American officials confirmed that talks could resume as early as next week.

At a weekly briefing, Commerce Ministry spokesman Gao Feng said China has been "very clear and consistent" about this demand.

"The United States' unilateral tariff increase on China's exports to the United States is the starting point for the Sino-US economic and trade frictions," he said.

"If the two sides can reach an agreement, the tariffs imposed must be completely eliminated."

The 25 per cent tax, now imposed on US$250 billion (S$339 billion) worth of Chinese exports ranging from furniture to consumer electronics, has been one of the major sticking points that led to talks between the two collapsing in May.

Beijing retaliated with duties on US$110 billion worth of American products.

Last Saturday, the leaders of both countries agreed to return to the negotiating table, with US President Donald Trump promising to withhold further tariffs and allow American tech companies to resume selling some of their components to Huawei.

The Chinese tech giant was put on a blacklist by the US Commerce Department in May, prohibiting it from doing business with American firms.

FINDING MIDDLE GROUND

The United States' unilateral tariff increase on China's exports to the United States is the starting point for the Sino-US economic and trade frictions. If the two sides can reach an agreement, the tariffs imposed must be completely eliminated.

MR GAO FENG, China's Commerce Ministry spokesman.

In return, Mr Trump said China has agreed to buy a "tremendous" amount of agricultural goods from the US - a claim that Beijing has yet to confirm.

When asked yesterday, Mr Gao would only say that both countries have "strong complementarities in the field of agricultural products trading, and there is huge room for cooperation".

US officials said on Wednesday that Beijing and Washington are in the midst of setting up a "principal-level phone call" for next week.

But White House economic adviser Larry Kudlow also told reporters that while Washington has been accommodative, "we will not lift tariffs during the talks". He said he hoped China would stick to its end of the deal by purchasing "a good many of American imports".

Talks fell apart in May after the US accused China of walking back on its commitments, while Beijing said Washington kept changing its demands and refused to remove existing tariffs. American negotiators also wanted China to change its laws and agree to an enforcement mechanism to ensure it kept to its word.

But even before the two sides sit down again, President Trump fired off a tweet on Wednesday, lambasting China of playing a "big currency manipulation game".

His salvo came after the latest economic data showed the US trade deficit had hit a five-month high in May, worrying some about how it would affect the fragile negotiations.

However, analyst Steven Okun said it was premature to attach too much meaning to the public rhetoric before the trade talks, as they are mostly aimed at the respective domestic audiences.

"The current impasse goes back years. The US - both government and many of its businesses - does not believe that China has lived up to its past bilateral trade commitments, in spirit if not in letter.

"The US is looking to find a way to ensure that China will follow through with its commitments in a new agreement, and sees keeping the existing tariffs as the best way to do that," said Mr Okun, who is a senior adviser at advisory firm McLarty Associates. "Both sides’ objectives can be met, such as a phase-out of the existing tariffs. That will take compromise from each."

Meanwhile, more than a hundred Asia experts including former diplomats signed an open letter this week, urging Mr Trump to reconsider his China policy, warning that a tough stance could end up hurting the US.

"US efforts to treat China as an enemy and decouple it from the global economy will damage the United States' international role and reputation and undermine the economic interests of all nations," said the letter.

"A zero-sum approach to China's role would only encourage Beijing to either disengage from the system or sponsor a divided global order that would be damaging to Western interests."

A version of this article appeared in the print edition of The Straits Times on July 05, 2019, with the headline 'Want deal? Remove tariffs first, China says'. Print Edition | Subscribe