https://www.ft.com/c...f9-b6515a54c5b1
Top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute but are still haggling over how to implement and enforce the agreement, people briefed on the talks have said. Liu He, China’s vice-premier, was preparing to meet Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, for a potentially climactic negotiation session starting on Wednesday in Washington. The talks are the latest in a series of meetings over the past four months. Although an agreement was within reach, the two sides remain apart on two key issues — 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 China abides by the deal. “We’re getting into the end-game stage,” said Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce. “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,” he told reporters on Tuesday.
If this week’s round of discussions is successful, it could pave the way for a summit between Donald Trump, the US president, and Xi Jinping, the Chinese president, this month, to sign an agreement that would lift a big cloud hanging over the global economy and financial markets. But in the absence of a breakthrough this week, China and the US could decide to extend the negotiations, possibly all the way until the G20 summit in Japan at the end of June.
In the most destabilising scenario, the talks could be ended abruptly, leading to a new escalation in tariffs and new stress for the markets. “Decisions have to be made: do we want this deal or not?” said Derek Scissors, a resident scholar at the American Enterprise Institute, a conservative-leaning think-tank. “Until President Trump looks at the final version, and listens to Lighthizer’s recommendation and decides he wants to stand up and endorse this, there’s always a possibility it doesn’t happen.” The deal under consideration would include a ramp-up in Chinese purchases of US goods to narrow the burgeoning bilateral trade deficit and a series of measures by Beijing to open its market to foreign businesses, including in digital trade. It is also expected to include some pledges by China to rein in the forced transfer of technology from US companies and the alleged theft of intellectual property. However, the breadth of Chinese concessions on these fronts remains unclear. The biggest source of tension between the US and China regards what happens the day after a deal is reached. China wants to see the tariffs imposed by Mr Trump’s administration on $250bn of goods over the past year removed immediately, while Washington wants to preserve some of them in order to keep pressure on Beijing to comply with the deal. Meanwhile, Mr Lighthizer is insisting on Washington’s right to unilaterally impose punitive tariffs on China if there is a violation of the agreement, and a guarantee that China would not retaliate with its own tariffs or challenge the action at the World Trade Organization — difficult concessions for Beijing to accept because they are seen as undermining its sovereignty. One possible compromise could involve a gradual lifting of US tariffs based on specific triggers and implementation dates, people close to the talks have said. Larry Kudlow, the director of the White House National Economic Council, gave little hint of what may come in the talks this week, saying he expected “additional headway” to be made, but adding that there were still “some issues” to be resolved in what was a “larger, grander discussion than anything we’ve ever had before” with China. “Things have to get done, I’m not going to get ahead of that story, we’ll see,” Mr Kudlow said. Since Mr Trump and Mr Xi agreed to launch talks to end their trade war at the G20 summit in Buenos Aires last December, hopes for an agreement have waxed and waned. In late February, after Mr Liu’s last visit to Washington, a deal seemed extremely close, but the negotiations slowed again in March. Last week, Mr Mnuchin and Mr Lighthizer were back in Beijing, and the atmosphere improved.
“Both governments understand the stakes here. We have been encouraged by the tone over the past few weeks,” Mr Brilliant said. William Zarit, a senior counsellor at the Cohen group, said the Chinese were also “pretty optimistic” about the prospects for a deal, despite worries among hawks in Beijing that they are at risk of conceding too much. “You wouldn’t see such frequency of visits if they weren’t getting anywhere,” said Mr Zarit, a former US official based in China. Observers of the US-China relations have cautioned that even if a deal is reached, it would not eliminate the other sources of tension in the economic and strategic duel between Washington and Beijing. “My impression is that the Chinese expect other issues to become more salient in the bilateral relationship after a trade deal is signed, including South China Sea, Taiwan and Xinjiang,” said Bonnie Glaser, senior adviser for Asia and director of the China Power Project at the Center for Strategic and International Studies in Washington. But Andy Rothman, an investment strategist at Matthews Asia, said without a trade agreement, those “longer-term tensions” in the US-China rapport could not even start to be discussed in a meaningful way — and that agreement could be coming soon. “Both Trump and Xi seem determined to do a reasonable deal, and that’s the key element,” he said.
worst-case scenario?....
Edited by .Blizzard, 03 April 2019 - 05:41 AM.
