According to China trade experts, the completion of the Phase One deal is likely to provide little incentive for Beijing to negotiate any further, given the approaching U.S. presidential election in 2020.
According to U.S. Trade Representative’s office and China’s Commerce Ministry, U.S. and Chinese officials are “close to finalizing” parts of a trade agreement following high-level telephone discussions on Friday.
The USTR provided no details on the areas of progress.
“They made headway on specific issues and the two sides are close to finalizing some sections of the agreement. Discussions will go on continuously at the deputy level, and the principals will have another call in the near future,” said a statement.
Both countries are in the process of removing the burrs in the text for a “Phase 1” trade agreement announced by U.S. President Donald Trump on October 11. Trump hopes to sign the deal next month at a summit in Chile.
Agricultural products are a major area of discussion.
According to China’s Commerce Ministry, both sides confirmed the United States will import Chinese-made cooked poultry and catfish products, while China will lift a ban on U.S. poultry.
According to sources briefed on the matter at hand, Beijing wants Washington to remove some of its existing tariffs on Chinese imports, in return China will pledge to step up its purchases of U.S. commodities, such as soybeans.
Washington wants Beijing to commit to purchasing these products at a specific time and price, while Chinese buyers would like the discretion to buy based on market conditions.
“They want to make a deal very badly,” said Trump to reporters at the White House on Friday. “They’re going to be buying much more farm products than anybody thought possible.”
White House advisers are hoping to cement a binding, enforceable agreement with Beijing, which includes a pledge to not force U.S. companies to transfer technology to Chinese companies to do business there.
According to two U.S. based sources, Beijing is expected to have asked Washington, during Friday’s call, to drop its plan to impose tariffs on $156 billion worth of Chinese goods, which will kick on December 15.
According to one of the sources, Beijing is also seeking the removal of 15% tariffs Trump imposed on September 1 on $125 billion of Chinese goods
“The Chinese want to get back to tariffs on just the original $250 billion in goods,” said the source.
Incidentally, the Phase One deal will not cover U.S. allegations of “Chinese hacking into U.S. companies and government agencies, state subsidies, Beijing’s alleged dumping of lower-priced products on global markets or China’s involvement in the fentanyl market”, said a source briefed on the negotiations.
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