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Progress Reported in U.S.-Mainland China Trade Talks

In the afternoon of 31 January, the White House issued a statement on the conclusion of two days of trade talks in Washington, D.C. between the United States and mainland China. The statement listed the issues under discussion as (i) pressure to transfer technology to mainland Chinese firms; (ii) intellectual property rights; (iii) tariff and non-tariff barriers; (iv) cyber-theft; (v) subsidies, state-owned enterprises and resulting excess capacity; (vi) market access barriers; and (vii) currency issues. The statement also referred to the continuing U.S. goods trade deficit with mainland China. At the White House briefing, the mainland Chinese delegation announced that large-scale purchasing of U.S. soybeans had resumed. In addition, a letter from President Xi to President Trump was read out loud at the briefing, with Trump praising the letter as “beautiful.”

U.S. Trade Representative Robert Lighthizer said at the briefing that a deal would not require ratification by the U.S. Congress, which is not surprising since congressional ratification is not necessary for completion of a memorandum of understanding. While the White House statement indicated that “both parties have agreed that any resolution will be fully enforceable,” some observers have expressed concern about the enforcement of an MOU, especially at the provincial level. Executive Vice President and Head of International Affairs for the U.S. Chamber of Commerce Myron Brilliant told reporters on a conference call that his members have concerns not only about central government policy but also “about how local provinces interpret regulations, interpret certification clauses and standard setting and things like that.” Enforcement provisions could also violate World Trade Organisation rules, leading to third-party challenges.

White House Economic adviser Larry Kudlow said on 1 February that the bi-lateral discussions “had a good vibe.” He highlighted the progress made during the talks, noting that “we covered a lot of specifics, and so I think it’s a hopeful story right now, but much work is still in front of us.” The White House statement also warned that U.S. tariffs “will increase unless the United States and China reach a satisfactory outcome by March 1, 2019.” As a next step, Lighthizer and Treasury Secretary Steven Mnuchin will lead a U.S. delegation to mainland China for another round of talks in mid-February. President Trump has said that any final agreement would be made at a meeting between himself and President Xi.

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