Mnuchin expects next China trade talks in ‘near future’
EU, China and others agree on temporary trade dispute appeal system
DAVOS: US Treasury Secretary Steven Mnuchin said on Friday that he expects to begin negotiations with China on a so-called Phase 2 trade deal soon, with Washington and Beijing on the same page.
“My guess is they (China) will consider waiving other tariffs as part of their purchasing program,” Mnuchin said of the $200 billion in additional US goods and services that China has pledged to buy.
“I don’t see any difference in our views. My expectation is that we’ll start conversations on phase two in the near future,” he said in an interview at the end of the annual meeting of the World Economic Forum (WEF) in the Swiss ski resort of Davos.
China had a low-key presence at the Davos meeting, with most of the focus on trade concentrated on a dispute between the United States and the European Union over a “digital tax”, with Washington threatening retaliation if the bloc’s members tax US based companies before an apparent compromise was reached. “Once there is a consensus, those tax changes need to be implemented and in many places, require legislation. We object to a tax that targets just American companies,” Mnuchin said.
With chief executives representing many of the biggest companies from around the world at Davos, it is often used as a barometer of business confidence and the economic outlook.
“It seems like Europe and Asia have bottomed and the US still looks in very good shape. So there’s a lot of positive attitudes,” Mnuchin said, with US tax cuts in prospect. “My expectation is that the focus of tax cuts will be for the middle class and some pro-growth incentives,” he added.
‘Other issues’
The biggest battleground during the four-day event has been the debate over how politicians and business leaders should tackle climate change, with much of the focus on exchanges between U.S. President Donald Trump and activist Greta Thunberg. This year’s WEF included a contingent of young activists like Thunberg, with the organizers keen to add to the voices engaging in debate at the exclusive event. “I was at dinner last night and people were very focused on the climate issue. My comment was, look we’re in the middle of a serious health issue in China. It was not a topic of discussion until I brought it up,” Mnuchin said.
“The environment is important. I just think it should be put in context. This goes back to a little bit of communication. The youth have focused on this one issue. But there are many other important issues that will impact the next generation.” One possibility, Mnuchin said, was to change the lexicon. “Perhaps the historical language that we use, we need to reconsider. When young people hear capitalism, perhaps it has a different meaning to them,” Mnuchin said.
“Perhaps the language we should be using is free markets versus managed markets. Open society versus closed society.” Addressing the use of sanctions by the United States, Mnuchin said it was a strategy that needed scrutiny because of the potential impact it could have on the U.S. dollar.
Appeal system “Sanctions are up dramatically. Over a very long period of time, we have to be careful in how we use these, where it could impact the use of the dollar. So we take that responsibility very seriously,” he said. Mnuchin is also looking at increasing the amount of US borrowing at longer maturities, with a focus on 20 years. “We can issue a lot more 20-year bonds than we could issue 50- and 100-year bonds. So in terms of our objective in both raising proceeds and extending duration, the 20-year bond is a priority at the moment,” he said.
Meanwhile, the European Union, China and 15 other countries agreed Friday to develop a temporary system for appealing trade dispute rulings after the recent USprovoked collapse of the WTO appeals body. Ministers from the group published a joint statement announcing a “multi-party interim appeal arrangement”.
This arrangement, reached during a meeting at the World Economic Forum in Davos, will allow all the participating parties to “preserve a functioning and two-step dispute settlement system at the WTO in disputes among them,” the EU explained in a statement.
The move came after the WTO appeals panel, sometimes dubbed the supreme court of world trade, halted its operations last month after years of relentless US opposition. Washington, which accuses the court of serious overreach, has blocked the appointment of new judges, leaving it without the quorum of three needed to hear cases due to mandatory retirements.
Ahead of the December 11 shutdown, Canada and the EU struck a bilateral deal last July to set up an interim panel to hear appeals in disputes that might arise between Brussels and Ottawa.
In Davos, they were joined by more than a dozen other countries: Australia, Brazil, China, Colombia, Costa Rica, Guatemala, South Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland and Uruguay.