Trade war endgame in sight with plans for Trump-Xi summit

Chinese Vice-Premier Liu He leaving the office of the US Trade Representative in Washington on Wednesday. US and Chinese officials are still discussing when their two leaders could sit down to sign off on their trade deal. PHOTO: BLOOMBERG

US, China negotiators making progress but still not there yet, says top White House aide

WASHINGTON • United States President Donald Trump was set to meet Chinese Vice-Premier Liu He at the White House yesterday, stoking expectations of an imminent summit with Chinese President Xi Jinping to seal an agreement to end an almost year-long trade war.

Mr Liu held meetings with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington on Wednesday. The goal over the next few days is to strike an agreement on the core issues so Mr Trump and Mr Xi can hold a ceremony to sign a deal.

As the talks resumed on Wednesday morning, Mr Trump's top economic adviser touted progress, but cautioned that a final deal to end the trade war remained elusive.

Negotiators are "making good headway", White House economic adviser Larry Kudlow told reporters at an event in Washington.

"But we are not there, and we hope this week to get closer," he said.

US and Chinese officials are still discussing when the two leaders could sit down to sign off on their trade deal. After Mr Xi's team initially floated a formal state visit to Washington as an option, China has pushed back against a meeting on US soil and wants to instead meet in a neutral third country, the people briefed on the plans said.

While White House officials have expressed cautious optimism in recent days about securing a deal soon, a US decision to tentatively sell fighter jets to Taiwan may affect the outcome of this week's talks as well as any Trump-Xi summit, one of the people said.

 
 

Given the geopolitical sensitivities of such a sale, that issue would likely be raised only when the two leaders meet and is unlikely to be part of the trade negotiations led by Mr Lighthizer.

Under the proposed agreement, China would commit by 2025 to buy more US commodities, including soya beans and energy products, and allow 100 per cent foreign ownership for American companies operating in China as a binding pledge that can trigger retaliation if left unfulfilled, according to the people who asked not to be identified because the talks are private.

Other non-binding promises China has offered to implement by 2029 would not be tied to po-tential US retaliation, they said without elaborating.

The limited timeframe raises questions about how much a deal would reshape the longer-term economic relationship, rather than simply serve as a political win for Mr Trump that would last through a potential second term as the 2020 election campaign kicks off.

While some progress is being made, resolving more contentious issues such as the forced transfer of technology is taking longer.

The White House is particularly focused on Chinese purchases of American goods through the second quarter of 2020, in an effort to narrow the trade balance ahead of Mr Trump's re-election bid. For that reason, the US is pushing for China to front-load a big chunk of the commodity purchases in the first two years the agreement is in place, people familiar with the situation said.

The merchandise-trade deficit with China hit a record US$419.2 billion (S$567.7 billion) last year.

The two sides are still haggling over how to enforce the deal, which Mr Lighthizer has said is the fundamental issue in the talks.

In congressional testimony in February, Mr Trump's top trade negotiator said the US wants the right to take unilateral, "proportional" action against China if it fails to abide by the rules.

A person familiar with the text said China so far has agreed only to consider avoiding retaliation if the US took action against Beijing, but stopped short of a formal pledge to refrain from counter-punching.

One of the final issues is what will happen to the tariffs the two sides have imposed on about US$360 billion worth of each other's goods in the past nine months. Mr Trump has suggested that at least some of the tariffs will stay in place, saying they are necessary "for a substantial period of time" to ensure Beijing keeps up its end of the bargain.

The text will also include benchmarks, likely set at 90 days and 180 days after signing, by which China is asked to fulfil key pledges, two of the people said, without giving further details.

WASHINGTON POST

 
A version of this article appeared in the print edition of The Straits Times on April 05, 2019, with the headline 'Trade war endgame in sight with plans for Trump-Xi summit'. Print Edition | Subscribe