Progress welcomed but US concerns linger over Chinese compliance with any trade deal

Ensuring Chinese compliance had been a concern of the US going into the talks, with Commerce Secretary Wilbur Ross calling it the "hardest" part.
Ensuring Chinese compliance had been a concern of the US going into the talks, with Commerce Secretary Wilbur Ross calling it the "hardest" part.PHOTO: REUTERS

WASHINGTON - The American business community generally welcomed the latest round of US-China trade talks but it highlighted the absence of agreement over a concrete way of ensuring that Beijing delivers on its promises, a much tougher challenge for the future.

Implementation of any deal must be "subject to ongoing verification and effective enforcement", a point raised by the US delegation during the talks, said the Office of the US Trade Representative (USTR) in a statement on Wednesday (Jan 9).

Beijing's statement on the talks, however, made no mention of such a mechanism.

Ensuring Chinese compliance had been a concern of the US going into the talks, with Commerce Secretary Wilbur Ross calling it the "hardest" part in an interview with CNBC on Monday.

"An agreement is fine, but the history has not been so good on compliance. So the real issue is what are the enforcement mechanisms, what are the punishments if people don't do what they were supposed to do?" said Mr Ross.

The US-China Business Council has zeroed in on follow-up mechanisms. Its president Craig Allen said in a statement after the talks that the council was pleased with substantive discussions held between the two countries, but emphasised that "progress should include a mechanism for the removal of tariffs and measurable, commercially meaningful outcomes".

"Any agreement between the governments should include positive incentives when China produces milestone deliverables, including a mechanism for removing US tariffs and Chinese retaliatory tariffs as progress is made," said Mr Allen.

 
 
 
 

The USTR statement said that structural changes in China needed to be achieved, including in the areas of forced technology transfer, intellectual property protection, non-tariff barriers, and cyber espionage.

Other observers were more sceptical, saying that much more still needed to be done.

Beijing's effort so far adds up "to a modest adjustment of Chinese foreign economic policy", Scott Kennedy, a scholar at the Center for Strategic and International Studies in Washington was quoted as saying, "but nowhere close to the great leap in liberalisation that the US and others are seeking".

Mr Steven Okun, senior adviser at McLarty Associates and president of the Asia Business Trade Association, told The Straits Times: "China needs to do more than just purchase US goods to lower the trade deficit. Will China address the 'structural changes' requested to the US' satisfaction? Will they make those changes in a timely fashion and subject to US enforcement?"

The clock is also ticking. The US and China are nearly halfway through their 90-day truce set to expire on March 1, as agreed to by President Donald Trump and President Xi Jinping on Dec 1 at the Group of 20 summit in Argentina.

Said Mr Okun: "The USTR statement makes clear much needs to happen in the next 50 days for an end to the trade war. There is unwarranted optimism that a resolution will be reached by March 2."