US eyeing roll-out of currency pact with China

Progress on previously agreed deal could halt Oct 15 tariff hike as senior-level talks resume

WASHINGTON • The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions.

The currency accord, which the United States said had been agreed to earlier this year before trade talks broke down, would be part of what the White House considers to be a first-phase agreement with Beijing.

It would be followed by more negotiations on core issues like intellectual property and forced technology transfers, the people said.

The internal deliberations come as a team of Chinese negotiators, led by Vice-Premier Liu He, arrived in Washington to resume trade talks with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, starting yesterday.

These are the first face-to-face talks between senior officials since July.

President Donald Trump said yesterday that he will meet Mr Liu today.

"Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice-Premier tomorrow at The White House," Mr Trump tweeted yesterday.

The signals heading into the talks have been mixed.

Mr Trump last week approved licences for some American companies to sell non-sensitive goods to Huawei Technologies, The New York Times reported, citing people familiar with the move.

 
 

While Mr Trump committed to the move after meeting Chinese President Xi Jinping in June, no licences have been issued yet.

The discussions around an interim deal come as the Trump administration this week further ramped up pressure on Beijing by blacklisting Chinese technology firms over their alleged role in oppression in the far west region of Xinjiang, as well as placed visa bans on officials linked to the mass detention of Muslims.

At the same time, a fight over free speech between China and the National Basketball Association, triggered by a tweet backing Hong Kong's protesters, has underscored the heated tensions.

The window for such an agreement is closing before a planned US hike in duties to 30 per cent from 25 per cent on about US$250 billion (S$344 billion) of Chinese imports next Tuesday. Additional duties are set to take effect Dec 15.

A Chinese official said on Wednesday that the country was still open to reaching a partial trade deal with the US that may include large purchases of American commodities, but added that success was contingent on Mr Trump halting further tariffs.

Showing progress with a currency pact and other matters this week could serve as a reason to delay next week's tariff hike.

Bloomberg News last month said the White House was discussing plans for an interim deal.

 
 

Still, Mr Trump this week said he preferred a complete trade agreement with China.

"My inclination is to get a big deal. We've come this far. But I think that we'll just have to see what happens. I would much prefer a big deal. And I think that's what we're shooting for," he said.

No details were made public about the US-China currency pact reached in February.

Broader trade negotiations between the two countries broke down in May after the US accused China of backtracking on its commitments. Then, in August, the Trump administration formally declared China a currency manipulator.

According to people familiar with the currency language, the pact largely resembles what the US agreed to in a new trade agreement with Mexico and Canada, and also incorporates transparency commitments included in Group of 20 statements.

Still, Mr Lighthizer cautioned earlier this year that the currency agreement hinges on the overall enforcement of the trade deal.

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A version of this article appeared in the print edition of The Straits Times on October 11, 2019, with the headline 'US eyeing roll-out of currency pact with China'. Print Edition | Subscribe