An­other pivot on China

The Washington Post - - FRONT PAGE - BY DAVID J. LYNCH [email protected]­post.com

A day af­ter the White House hinted a pact was close, Trump said it may not wrap up this year.

Pres­i­dent Trump sug­gested on Fri­day that the United States and China may not com­plete a par­tial trade deal this year, rais­ing fresh doubts about prospects for a com­mer­cial truce that once was ex­pected to be signed next week­end.

“We’ll see what hap­pens,” the pres­i­dent replied when a re­porter asked if the agree­ment would be con­cluded in 2019.

Speak­ing on the south lawn of the White House, the pres­i­dent added to con­fu­sion over the state of the roller coaster talks. He de­nied re­ports — which the White House had con­firmed one day ear­lier — that he had agreed to re­move some tar­iffs as part of an ini­tial deal.

“I haven’t agreed to any­thing,” Trump told re­porters. “China would like to get some­what of a roll­back, not a com­plete roll­back be­cause they know I won’t do it.”

The pres­i­dent’s re­marks ap­peared to con­flict with those of his Na­tional Eco­nomic Coun­cil di­rec­tor, Larry Kud­low. On Thurs­day, Kud­low con­firmed the Chi­nese Com­merce Min­istry’s claim of a tar­iff ac­cord, telling Bloomberg News: “If there’s a Phase 1 trade deal, there are go­ing to be tar­iff agree­ments and con­ces­sions.”

But re­flect­ing ad­min­is­tra­tion di­vi­sions, Peter Navarro, one of Trump’s clos­est trade ad­vis­ers, emailed re­porters a few hours af­ter the pres­i­dent’s re­marks to com­plain that me­dia re­ports had been wrong. “There is no agree­ment to re­move any ex­ist­ing tar­iffs as a con­di­tion of sign­ing a Phase One deal,” Navarro wrote.

Chi­nese of­fi­cials have in­sisted any deal must in­clude the im­me­di­ate re­moval of some tar­iffs and a path to­ward the elim­i­na­tion of all of the levies Trump has im­posed since March of last year.

The pres­i­dent turned to tar­iffs last year to force China to aban­don trade prac­tices, es­pe­cially in the high-tech­nol­ogy area, that dis­ad­van­taged Amer­i­can com­pa­nies.

The United States cur­rently levies tar­iffs on roughly $360 bil­lion in Chi­nese im­ports and plans to ex­tend the im­port fees to ev­ery­thing Amer­i­cans buy from China start­ing Dec. 15.

Many ad­min­is­tra­tion of­fi­cials op­posed Trump’s de­ci­sion to im­pose those tar­iffs on roughly $160 bil­lion in prod­ucts, in­clud­ing pop­u­lar con­sumer goods such as smart­phones and lap­tops. The pres­i­dent now is seen as will­ing to scrap them.

Chi­nese of­fi­cials also want the United States to lift the 15 per­cent tar­iff Trump im­posed Sept. 1 on about $112 bil­lion in im­ports. In re­turn, the ad­min­is­tra­tion is de­mand­ing that Bei­jing agree to more ex­ten­sive in­tel­lec­tual prop­erty safe­guards, ac­cord­ing to two peo­ple fa­mil­iar with the talks, who spoke on the con­di­tion of anonymity be­cause they weren’t au­tho­rized to dis­cuss the talks.

Trump’s whirl­wind morn­ing left un­clear the state of the talks four weeks af­ter he had an­nounced an “agree­ment in prin­ci­ple” on an ini­tial deal. Speak­ing in the Oval Of­fice dur­ing a meet­ing with Chi­nese Vice Premier Liu He, the pres­i­dent on Oct. 11 called the par­tial deal “sub­stan­tial” and said it would pave the way for ad­di­tional agree­ments in sub­se­quent talks.

In re­turn for can­cel­ing a planned Oct. 15 in­crease in tar­iffs on Chi­nese prod­ucts, Trump said he had se­cured Bei­jing’s prom­ise to make an­nual pur­chases of $40 bil­lion to $50 bil­lion worth of Amer­i­can crops.

China also had agreed to toughen pro­tec­tions for in­tel­lec­tual prop­erty, open its fi­nan­cial ser­vices mar­ket to for­eign com­pa­nies, and fore­close de­press­ing the value of its cur­rency to gain a trade ad­van­tage, ad­min­is­tra­tion of­fi­cials said.

“I don’t think it should be a prob­lem, get­ting it pa­pered,” the pres­i­dent said at the time, adding that he ex­pected that to oc­cur over the next four weeks.

Four weeks later, the talks are shrouded in un­cer­tainty. Ini­tial plans for Trump and Chi­nese Pres­i­dent Xi Jin­ping to sign the “phase one” deal on the side­lines of an Asian-pa­cific sum­mit in San­ti­ago, Chile, next week­end have been aban­doned.

The pres­i­dent Fri­day re­peated his claim that any sign­ing cer­e­mony will be held in the United States, pos­si­bly in Iowa or else­where in “farm coun­try,” he said.

The lat­est ex­change over tar­iffs be­gan with a Chi­nese Com­merce Min­istry state­ment Thurs­day in Bei­jing.

“If the two par­ties reach the first-phase agree­ment, they should, in ac­cor­dance with the con­tents of the agree­ment, si­mul­ta­ne­ously and pro­por­tion­ally can­cel the tar­iffs that were al­ready raised,” said Gao Feng, a min­istry spokesman.

Robert E. Lighthizer, the U.S. trade rep­re­sen­ta­tive, is push­ing China to ac­cept an en­force­ment mech­a­nism that would con­di­tion tar­iff re­duc­tions on Chi­nese im­ple­men­ta­tion of the agree­ment. Tar­iffs would fall — or rise — de­pend­ing on whether Bei­jing com­plied with spe­cific terms, said one per­son fa­mil­iar with the talks who spoke on the con­di­tion of anonymity be­cause the per­son wasn’t au­tho­rized to dis­cuss the talks.

BILL O’LEARY/THE WASH­ING­TON POST

Pres­i­dent Trump on Fri­day de­nied re­ports that he had agreed to re­move some tar­iffs as part of an ini­tial trade deal with China.

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