US considers resuming semi-annual talks with China for reforms

The negotiations will be announced on Jan 15 as part of the signing of a Phase 1 trade deal between the US and China, but will be separate from any second-phase trade negotiations, and the effort will be led by US Treasury Secretary Steven Mnuchin (left) and Chinese Vice-Premier Liu He. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - The Treasury Department is proposing that the Trump administration revive twice-yearly talks with China to discuss the economic relationship between the countries, according to people familiar with the matter.

The talks - if they go ahead - would be separate from phase-two negotiations on a further trade deal that President Donald Trump has said he wants to start "right away."

The two sides are slated to sign a phase-one agreement on Jan 15 that includes commitments from China to buy US farm products and other goods in exchange for some reductions in tariffs on Chinese imports.

The idea of semi-annual discussions is being advocated for by Treasury Secretary Steven Mnuchin, the people said. It harkens back to the strategic economic dialogue begun in 2006 when George W. Bush was president.

That effort was spearheaded on the US side by then Treasury Secretary Hank Paulson and included high-level representatives from other US government agencies, including the Commerce and Energy departments.

The meetings were designed to examine long-term strategic issues and provide a framework for separate talks on individual economic disputes such as China's currency policy.

President Barack Obama expanded the initiative in 2009 to include national security and designated his secretaries of the Treasury and the State Department to head it.

China critics in the US have derided the dialogues for having failed in the past to result in any major changes in China's economic policies.

Trump himself regularly belittles past administrations' dealings with China, arguing that he's the first US leader to tackle what he sees as China's predatory trade and economic policies.

Dow Jones reported earlier that the two nations plan to announce that they'll resume bi-annual talks at the signing of an initial trade deal set for Jan 15 in Washington, citing an unidentified administration official and other people familiar with the matter.

But people familiar with internal deliberations said Saturday that while Mnuchin proposed the idea, it was not yet a done deal and faced opposition from some members of the administration.

Mnuchin would lead the US side, while the Chinese efforts would probably be headed by Vice Premier Liu He, according to the Dow Jones report.

The semiannual talks would also be separate from meetings to negotiate any second phase of a trade deal between the two countries, that report said.

A spokesman for the Treasury Department declined to comment.

Foreign policy and trade experts who worked for previous US administrations praised the prospect of resuming regular dialogues.

"Issues between US and China are tough and tariffs proved not to be the silver bullet," Wendy Cutler, vice president at the Asia Society Policy Institute and a former negotiator in the Office of the US Trade Representative, said in a tweet.

Hawks inside the administration who advocate for a tougher position on China see resuming anything like the dialogues in past administrations as a mistake, according to one person familiar with the discussions.

Such a move could undermine negotiations for a phase two trade deal, said the person, who declined to be named because the discussions are private.

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