China

Robert Lighthizer, U.S. trade representative, left, and Vice President Mike Pence listen during a phone conversation between U.S. President Donald Trump and Enrique Pena Nieto, Mexico's president, not pictured, in the Oval Office of the White House on Monday, Aug. 27, 2018. Bloomberg photo by Al Drago

WASHINGTON — U.S. and Chinese negotiators met Thursday, Oct. 10, amid rising hopes for a partial trade deal that would mark the first step back from a worsening dispute, but would leave the thorniest issues for future talks continuing deep into a presidential election year.

Robert Lighthizer, the president's trade chief, and Treasury Secretary Steven Mnuchin led the U.S. delegation that met a team from Beijing headed by Chinese Vice Premier Liu He. The high-powered Chinese squad, including the country's central bank chief and a hard-line Commerce Minister, brought a proposal for an "early harvest" accord, according to people familiar with the talks.

At the White House, President Donald Trump gave reporters an upbeat assessment at day's end, saying the talks were "going really, really well," adding: "They're basically wrapping it up."

The Chinese package includes a large increase in annual purchases of U.S. farm products, improved terms for access to China's market for autos and financial services and tougher enforcement of certain intellectual property safeguards, said Myron Brilliant, executive vice president of the U.S. Chamber of Commerce.

Beijing has dropped its insistence that any deal must be conditioned on the elimination of all tariffs that President Trump has imposed since the trade war began last year. Instead, they are asking that future increases planned for Oct. 15 and Dec. 15 - which would affect scores of popular consumer products - be canceled and that the U.S. roll back a recent tariff hike that took effect Sept. 1.

The two sides also may spotlight a currency agreement that was first made public several months ago, which would rule out manipulating the yuan's value to gain a trade advantage, the people said.

Business leaders are urging the two sides to accept the multipart trade as a down payment on a comprehensive accord. "We've got to have progress," said Brilliant. "The window for moving these trade talks forward is closing."

The president has repeatedly scoffed at the notion of settling for a limited accord, insisting that profound changes are required in China's state-directed economic model to create a more reciprocal trade relationship. "I'm not looking for a partial deal. We're looking for the big deal," he said last month.

But Trump is under pressure from his supporters, especially in the industrial Midwest and farm belt, to show signs of progress in a commercial standoff that has lasted for more than a year. A key manufacturing index last week fell to its lowest mark in a decade, business investment has turned negative and Senate Majority Leader Mitch McConnell has called for bringing the talks to a conclusion "soon" to ease rural America's pain.

"There's a lot of pain on both sides," said Craig Allen, president of the U.S.-China Business Council. "Both sides are under stress."

Trump also has adopted the two-step approach to trade talks with other negotiating partners. Last month, he announced a partial agreement with Japan that is expected soon to lead to talks on a more complete deal.

Earlier Thursday, the president raised hopes of a temporary China settlement with a tweet confirming that he had invited Liu to the White House tomorrow after the talks conclude. "Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House," the president tweeted.

If enough progress is made this week, Trump could seal an agreement with Chinese President Xi Jinping at an Asia-Pacific leaders' summit in Chile next month.

Still, the package under discussion may not satisfy administration officials who are determined to force China to curb its lavish subsidies for its state-owned enterprises and to abandon its practice of stealing American trade secrets or forcing foreign companies to transfer technology to Chinese partners. Some Trump allies are skeptical that Beijing will keep any promises offered now or will follow through on broader changes in future talks.

"It sounds like the same thing they were offering in 2017," said one Trump supporter, who requested anonymity to speak freely.

The negotiations also are complicated by a host of non-trade issues that have arisen, including the pro-democracy protests in Hong Kong and U.S. sanctions on Chinese companies implicated in human rights abuses in China's Muslim-majority Xinjiang province. The administration also is mulling a range of proposals to limit financial ties between the two countries.

One idea under consideration is to blacklist Chinese companies that repeatedly steal U.S. intellectual property, according to two people familiar with the plan who spoke on the condition of anonymity.

Placing more Chinese companies on the Commerce Department's "entity list" effectively blocks them from doing business in the United States unless they obtain a special license.

The recent flurry in the White House to come up with enforcement ideas beyond tariffs is a revival of the process that started early in the Trump administration to have both a "tariff track" and an investment restriction track, according to Timothy Fitzgerald, an associate professor at Texas Tech University and former member of Trump's Council of Economic Advisers.

The NBA found itself at the center of the tensions after the general manager of the Houston Rockets tweeted in support of the protests over the weekend. The NBA later put out a statement saying it recognized that the tweet "offended so many of our friends and fans in China, which is regrettable."

But the statement sparked a backlash, prompting Commissioner Adam Silver to say the NBA would "not put itself in position of regulating what players, employees and team owners say." Meanwhile, China suspended television broadcasts of NBA games, and many Chinese companies cut advertising relationships with the league.

On Wednesday, Trump declined to criticize China for pressuring the NBA to renounce a large executive's support for the demonstrations. But he also chastised league coaches Steve Kerr and Gregg Popovich, who have been critical of Trump in the past, for allegedly "pandering to China." Trump added that the coaches "talk badly about the United States, but when it [comes to] China they don't want to say anything bad."

Apple on Wednesday said it would remove an app that was used by Hong Kong protesters to track the movement of police. The tech giant said it learned the app had been "used in ways that endanger law enforcement and residents" in Hong Kong.

But the app's developers said there had been no evidence that the app had been used in a way that threatened public safety. The developers said Apple had made "a political decision to suppress freedom."

Asked about the negotiations on Wednesday, Trump said he thought a deal was in reach but that any resolution must be better for the U.S. than for China.

"This has to be a better deal from our standpoint. I think they fully understand it," Trump said. "I think China has a lot of respect for me, for our country, for what we are doing. I think they can't believe what they have gotten away with for so long."

This article was written by Rachel Siegel and David J. Lynch, reporters for The Washington Post. The Washington Post's Anna Fifield and Heather Long contributed to this report.

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