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Little Detail on Outcome of U.S.-Mainland China Trade Talks

The United States and mainland China met in Beijing on 7-9 January to hold their first talks since agreeing to a trade ceasefire in December. The negotiations were extended an extra day but reports have offered scant information on any results.

An increase in the Section 301 additional tariff on US$200 billion worth of mainland Chinese goods from 10 percent to 25 percent had been scheduled to take effect on 1 January 2019 but was postponed to 1 March to give the two sides time to resolve long-standing trade irritants. The recent negotiations involved mid-level officials and were broadly seen as a precursor to higher-level discussions, which have not yet been scheduled.

The Office of the U.S. Trade Representative issued a statement indicating that the talks focused on the Trump administration’s long-standing efforts to “achieve fairness, reciprocity, and balance in trade relations between our two countries.” In part, this refers to the U.S. interest in reducing its growing trade deficit with mainland China, which could be achieved if Beijing honours a “pledge to purchase a substantial amount of agricultural, energy, manufactured goods, and other products and services from the United States.” U.S. Commerce Secretary Wilbur Ross said this issue is “probably the easiest one to solve.”

However, USTR made clear that it also remains focused on “achieving needed structural changes in China with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services, and agriculture.” These are among the 142 items on which Washington reportedly notified Beijing last year it wants to see progress, and while mainland China has indicated in recent months a willingness to pursue reform on some it has resisted changes on others.

USTR states that the two sides also discussed “the need for any agreement to provide for complete implementation subject to ongoing verification and effective enforcement.” USTR Robert Lighthizer and other U.S. officials believe mainland China has often failed to follow through on previous trade commitments and want to ensure it does so in the future, including by not implementing other policies or practices that would negate the beneficial effect of any changes agreed. Press sources note that enforcement options could include keeping current tariffs on mainland Chinese goods in place until Beijing carries out its pledges and re-imposing them if mainland China goes back on its word.

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