Northwest Arkansas Democrat-Gazette
U.S., China said to be close to deal
It requires Beijing to buy energy, farm goods, sources say
WASHINGTON — President Donald Trump’s administration is close to a trade deal with China that would roll back tariffs on both sides of the Pacific, people with knowledge of the talks said.
Significant details remain unsettled and the deal is still being discussed, but so far, the two sides have agreed on a pact that would largely require Beijing to make big purchases of U.S. agricultural and energy goods and to lower some barriers that prevent U.S. companies from operating in China. In return, the United States would most likely drop its tariffs on at least $200 billion of the $250 billion worth of Chinese imports currently subject to U.S. levies.
China, which has retaliated against Trump’s tariffs with its own punishing taxes on U.S. goods, is pushing for the elimination of all of the Trump tariffs, a person with knowledge of the negotiations said. It is unclear whether the Trump administration will agree to remove all the tariffs or retain some to keep pressure on China. As part of the agreement, the Trump administration has been pushing China to accept an enforcement mechanism that would enable the United States to quickly reinstate tariffs if Beijing fails to live up to specific promises.
For Trump, the ability to announce a deal with China would constitute a victory for a presidency rocked by investigations and failed nuclear disarmament talks in North Korea last week. Trump has spent more than a year accusing China of unfair trade practices and promising to shift the balance of economic power back to the United States.
The agreement under discussion would expand markets for U.S. financial services firms and farmers, in part by requiring that China buy large amounts of energy and
farm goods, such as liquid natural gas and soybeans.
But early details indicate it would do little to substantively change the way China has long done business and would not force Beijing to curtail cybertheft or the subsidies that the administration complains create an uneven playing field for U.S. companies.
The language aimed at China’s discrimination against foreign companies, like its anti-monopoly law or standard-setting processes, is probably too vague to be enforceable, while China’s promises on curtailing subsidies are also overly broad, a person familiar with the negotiation said. The pact also doesn’t alter China’s tight restrictions on data, the person said. In addition, many of the big purchases that Beijing is promising would occur over a number of years, which could give China further leverage during that period,
critics say.
Regardless of what Trump’s negotiators agree upon, no deal will be final until the president signs onto the agreement. Since starting his trade war last year, Trump has vacillated between accusing China of destroying U.S. jobs and playing up his strong relationship with President Xi Jinping and his ability to reach a trade deal. Trump recently began dangling a signing event with Xi at Mar-a-Lago, the president’s Florida resort, and that ceremony seems to be coming together for later this month. While Trump wanted a summit earlier in the month, the event could occur at the end of March, after Xi finishes a scheduled trip through Europe, according to people familiar with the discussions.
China wants to present the image that a deal is at hand as several thousand top officials of the Chinese Communist Party and hundreds of the country’s most prominent business leaders gathered in Beijing over the weekend for the annual session
of the legislature, the National People’s Congress, which starts today.
The Chinese government has been willing to discuss moves that it perceives as being in China’s interest, from long-term purchases of commodities that are needed for Chinese factories to changes in China’s foreign investment law that make it a more attractive place for overseas companies to operate. But people familiar with the Chinese government’s stance say it is determined to say no to policy changes that do not benefit its interest.
Beijing has carried out most of the legal work needed for the legislature to pass a new, comprehensive law on investment by foreign businesses that would help satisfy some of America’s earlier demands. The law will be the framework for China to reduce its limits on foreign stakes in Chinese banks, insurers and asset management companies — something that Xi had agreed to do in November 2017, when Trump went to Beijing for talks before the trade war.
In a congressional hearing last week, Robert Lighthizer, the U.S. trade representative, signaled a long road ahead to reaching an agreement but said the United States would push for a substantive deal that did not merely result in purchases of U.S. goods.
“What we want is fair trade that requires structural change and it has to be enforceable,” Lighthizer said.
He said the United States and China were working to establish an enforcement mechanism that would involve an extensive series of meetings at various levels of government and the threat of tariffs if China was found to have violated the trade agreement.
The Chinese continue to be concerned that, after they have made concessions to get to the brink of a deal, Trump will be persuaded by more hawkish voices in the media or the administration to try to press China for even more, said Eswar Prasad, a senior fellow at the Brookings Institution.