U.S., China Tentatively Move to Revive Trade Talks

Date: July 9, 2019
Source: Wall Street Journal

Top American and China negotiators are set to speak this week in an effort to revive stalled trade talks, as discord over prior commitments and political considerations threaten to bog down discussions.

President Trump and Chinese President Xi Jinping agreed at the Group of 20 leading economies meeting in Osaka, Japan, in June to formally resume talks. Yet people following the process say that the issues that snagged talks two months ago remain.

Among the sore spots: U.S. demands for China to buy more American agricultural and industrial products and to enforce protection of intellectual property and China’s insistence that the U.S. remove tariffs on $250 billion in Chinese goods.

“One side or the other can always cave and talks can wrap very quickly, but, barring that, Osaka was conflict limitation, not conflict resolution,” said Derek Scissors, a resident scholar at the American Enterprise Institute think tank, who has consulted with the U.S. administration.

Senior officials from each side, including Robert Lighthizer, the U.S. trade representative, are set to speak by telephone this week, a U.S. official said. If successful, that could lead to face-to-face talks, likely in Beijing, people following the talks said.

The last round of face-to-face meetings that took place in Washington in May ended in an impasse.

“Our hope is that both sides will come to the table in earnest as soon as practically possible,” said Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce. “But each side has to consider its own political environment, and there are obstacles to a swift deal being done.”

At the summit on June 29, Mr. Trump said he would put aside plans for additional tariffs on about $300 billion in Chinese imports and said he would ease a U.S. blacklist of China’s Huawei Technologies Co. by allowing U.S. companies to sell some components to Huawei if the exports aren’t seen as a security risk. U.S. regulators have yet to offer specifics on how that will be accomplished.

In his press conference in Osaka, Mr. Trump also promised relief for U.S. farmers, who have been caught in the middle of the conflict as China slowed its purchases of U.S. soybeans, corn and other products.

“China is going to be buying a tremendous amount of food and agricultural product, and they’re going to start that very soon, almost immediately,” Mr. Trump said.

China, however, has made no official mention of a commitment to purchasing more U.S. agricultural products, and a person with knowledge of the event said Mr. Xi made no such promise during his meeting with Mr. Trump.

White House trade adviser Peter Navarro said Beijing did make commitments. “The Chinese side promised to make immediate and significant purchase of our agricultural products,” Mr. Navarro told Fox Business Network on Thursday. “Let’s see if they keep that promise.”

Shortly before the presidents’ meeting two weeks ago, China purchased 544,000 metric tons of U.S. soybeans, according to U.S. Department of Agriculture data, the largest Chinese purchase since March. Last week, the first -ever large-scale sale of rice to China was announced by USA Rice, a trade group of rice producers.

A spokesman for China’s Commerce Ministry sidestepped a question about whether Beijing committed to making future farm purchases. “There’s huge room for cooperation,” spokesman Gao Feng said at a briefing last week. He said China doesn’t want to see agricultural trade hurt by the dispute so it is an issue for the two governments to discuss.

China is willing to commit to purchases of U.S. goods as part of an overall trade deal, but that deal needs to be balanced with both sides making concessions, another person with knowledge of the matter said.

“We know the two leaders would have reached a principles-based agreement, but how Chinese buying will proceed would be left to subsequent detailed negotiations,” said Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges. On buying agricultural goods, he said, “China has a very good willingness, but that’s based on having an end to the trade fight.”

Beijing has said U.S. demands for Chinese purchases of U.S. goods should be reasonable. Chinese officials say that meant they must be based on domestic Chinese demand, rather than requiring China to divert purchases it now makes from other countries.

Mr. Trump, meanwhile, is under pressure to produce a deal that offers structural changes in China’s economy that Beijing appears to be increasingly resisting, said Steve Bannon, former White House chief strategist.

“The reality is this is going to be quite difficult,” Mr. Bannon said. “Trump has to bring along three constituencies—Wall Street, corporations and the voters. That’s a tall order but must be done.”

—Lingling Wei in Beijing contributed to this article.

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