US, China move closer to final trade deal

China's Vice Premier Liu He (C) gestures with US Treasury Secretary Steven Mnuchin (R) as US Trade Representative Robert Lighthizer (L) looks on as they pose for a photo at Diaoyutai State Guesthouse in Beijing on March 29, 2019. - Beijing said US and Chinese negotiators still face a "large amount of work" as they meet for fresh talks aimed at resolving a months-long trade war. PHOTO: AFP

WASHINGTON (REUTERS) - The United States and China have made headway in trade talks this week, with final discussions centred on how to implement and enforce an agreement, reported the Financial Times on Wednesday (April 3).

Hurdles still remain though, said the business publication, which noted that the two countries remained far apart on two important issues, namely the fate of existing US levies on Chinese goods, which Beijing wants to see removed, and the terms of an enforcement mechanism demanded by Washington to ensure that the Asian giant abides by the deal.

"We're getting into the end-game stage," said Mr Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce. "We're getting to the point where it's clear that both governments want a deal. The presidents want a deal, and they need to get through the end-game issues. This is a critical week."

In further remarks quoted by the Financial Times, Mr Brilliant added: "Ninety per cent of the deal is done, but the last 10 per cent is the hardest part, it's the trickiest part and it will require trade-offs on both sides."

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are due to resume talks with Chinese Vice-Premier Liu He on Wednesday, just days after the two sides reported progress in talks last week in Beijing.

White House economic adviser Larry Kudlow refused to provide any further details on the matter on Tuesday beyond saying "there's a certain amount of optimism".

Mr Kudlow, who directs the White House National Economic Council, acknowledged that there are still issues to be resolved, and the Trump administration will focus heavily on ways to hold China to keep its reform promises and curbing intellectual property theft and forced technology transfers and lowering tariff and non-tariff barriers.

The US and China have levied tariffs on hundreds of billions of dollars' worth of two-way trade since July 2018, raising costs, disrupting supply chains and roiling global markets.

US President Donald Trump's administration is pressuring Beijing to meet a long list of demands that would rewrite the terms of trade between the two countries, including changes to China's policies on intellectual property protection, technology transfers, industrial subsidies and other trade barriers.

Mr Trump on Tuesday afternoon repeated his now-familiar refrain that China trade talks were going "very well" as he met Nato Secretary-General Jens Stoltenberg at the White House.

Absent significant process this week on the "tricky" issues of tariffs and enforcement, the goal to complete a deal this month may be missed, Mr Brilliant said.

The Trump administration and American companies want structural IP and market economy issues addressed, with a way to ensure China follows through on its promises, Mr Brilliant said.

US officials favour tariffs as a way to maintain leverage on China and ensure those obligations are met. But it is unlikely that China would agree to an enforcement mechanism that included re-imposition of unilateral US tariffs without the current tariffs being removed, Mr Brilliant said.

The continued threat of tariffs hanging over commerce would mean a deal would not end the risk of investing in businesses or assets that have been affected by the trade war.

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