US, Chinese Leaders Aim for Negotiated Trade Outcomes Within 100 Days
US President Donald Trump and Chinese President Xi Jinping have agreed to negotiate a set of trade outcomes within just over three months, officials say, following two days of talks at the American leader’s resort in Florida.
The 6-7 April meeting at Mar-a-Lago had already been billed as an opportunity to build ties between the two leaders, such as allowing for early discussions between them on trade. It was their first face-to-face meeting since Trump took office in January. (See Bridges Weekly, 6 April 2017)
“Tremendous goodwill and friendship was formed, but only time will tell on trade,” said Trump on social media site Twitter after meeting with the Chinese leader.
According to a statement released by the White House Press Secretary, the two leaders have agreed to set up a “United States-China Comprehensive Dialogue” that will split up into various areas, including a dialogue specific to economic issues.
“The two sides agreed to undertake an ambitious agenda and meeting schedule to show progress and demonstrate meaningful results,” said the press secretary’s statement regarding the new “Comprehensive Dialogue” platform.
The statement did not clarify how this new dialogue and its component parts would relate to existing bilateral frameworks for discussing trade and commerce, such as the US-China Joint Commission on Commerce and Trade (JCCT) and the US-China Strategic and Economic Dialogue (S&ED), though some reports have suggested that it could incorporate elements of the latter.
The JCCT has been in place for decades. It meets yearly and is chaired by the heads of the Commerce Department and the Office of the US Trade Representative, together with the Chinese Vice Premier on trade and investment, with support from other relevant agencies.
The S&ED has been in place for the past eight years under the administration of previous US President Barack Obama, and was designed as a high-level platform for improving cooperation on issues ranging from trade to climate change.
One hundred days
The two leaders have agreed to work on generating outcomes relating to trade within the next 100 days, confirmed US Commerce Secretary Wilbur Ross, who spoke to reporters in a joint briefing with Secretary of State Rex Tillerson and Treasury Secretary Steven Mnuchin.
“Normally, trade discussions, especially between China and ourselves, are denominated in multiple years. This was denominated in the first instance in 100 days with hopefully way stations of accomplishment along the way,” said Ross.
These “way stations,” the Commerce chief explained, would still need to be hammered out by negotiators, while adding that Washington’s goal is to increase Chinese-bound exports and slash the trade deficit between the two sides.
“The most interesting thing to me was they expressed an interest in reducing their net trade balance because of the impact it’s having on money supply and inflation. That’s the first time I’ve heard them say that in a bilateral context,” said Ross.
Responding to questions over Trump’s campaign trail pledge to name China a currency manipulator, Mnuchin said that the subject will be addressed further pending a report from his agency on exchange rate policies.
Trump has since suggested in an interview in the Wall Street Journal that the report will not be classifying China as a country that manipulates its currency at this stage.
The Department of the Treasury releases on a semi-annual basis a report examining the exchange rate policies of major trading partners, with the next instalment due to go online by the end of this week. The last report was issued in October 2016 and had deemed that no country – including China – qualified for a “enhanced analysis” on whether they have implemented “unfair currency practices.”
It is one of the six countries that remains on a lesser “monitoring list,” though the October report said that no major US trading partner met the criteria to be deemed a currency manipulator. (See Bridges Weekly, 15 March 2017)
Items that could emerge into concrete outcomes in the coming 100-day talks may include the easing of some restrictions on imports of US beef. China had in place until last September an import ban on beef following a 2003 case in the US of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease.
Also under discussion are ways to make it easier for overseas investors to become majority owners in Chinese security and insurance businesses, according to the Financial Times, which cited unidentified officials on both sides.
“I think obviously beef exports and additional market access in China, intellectual property, the ability to have foreign ownership, especially in the services industry, is something that has been a prize of US exporters and industry for a long time,” said White House Press Secretary Sean Spicer in response to questions on the reported concessions on beef and financial investments.
“It is something that is being hammered out as we go forward,” he added.
Lawmakers’ wish list
Going into the meeting, a group of bipartisan lawmakers sent a letter to Trump outlining some of the topics they were aiming to see discussed by leaders in Mar-a-Lago.
The letter was co-signed by Orrin Hatch, the Republican Senator from Utah who chairs the Senate Finance Committee; Ron Wyden, Democratic Senator from Oregon who is the ranking member of that same panel; Kevin Brady, the Republican congressman from Texas who chairs the House Ways and Means Committee; and Richard Neal, the Democrat from Massachusetts who is that panel’s ranking member.
“While we recognise that many US companies have productive operations in China and are exporting to and investing in China, we continue to be alarmed by the growing number of trade barriers that China imposes,” said the four lawmakers.
The topics that they cited included alleged market-distorting practices in the areas of agriculture and manufacturing; currency and foreign exchange rate policies; intellectual property rights enforcement and technological policies; and issues of transparency and “retaliatory” measures.
They advocated for building on the JCCT and S&ED frameworks with follow-up actions that involve “vigilant enforcement of the commitments that China has made to the United States, including through those dialogues, and at the WTO.”
The lawmakers also suggested that concluding a high-quality bilateral investment treaty with China, which has been under negotiation for several years, could also go a long way toward tackling some of their concerns.
ICTSD reporting; “At US-China summit, Trump presses Xi on trade, N. Korea; progress cited,” CNBC, 10 April 2017; “China offers concessions to avert trade war with US,” FINANCIAL TIMES, 9 April 2017; “China hopes for progress in investment treaty negotiations with U.S.,” XINHUA, 10 April 2017; “Spotlight: Xi-Trump meeting helps achieve much friendlier tone in China-U.S. ties: experts,” XINHUA, 11 April 2017; “Trump Says Dollar ‘Getting Too Strong,’ Won’t Label China a Currency Manipulator,” WALL STREET JOURNAL, 12 April 2017.