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U.S. and Mainland China to Continue High-Level Trade Talks Ahead of Scheduled Tariff Increase

The United States and mainland China saw “progress” in recent trade talks in Beijing but “much work remains,” according to a 15 February White House statement. Talks will continue in Washington during the week of 18 February as the two sides seek to avoid a scheduled 2 March increase in U.S. tariffs on US$200 billion worth of imports from the mainland from 10 percent to 25 percent.

According to the statement, the United States continues to focus on structural issues such as forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers and currency. The two sides also discussed mainland China’s purchases of U.S. goods and services, which could reduce the U.S. trade deficit with the mainland. However, the two sides are reportedly still working to develop a memorandum of understanding, which the statement indicates would set forth any commitments made.

The White House said the discussions were “detailed and intensive” but offered no additional information. According to press sources, the talks saw mainland China promise to notify its central and local government subsidies to the World Trade Organisation and eliminate those that violate WTO rules. Press reports continue to speculate on possible purchases by mainland China of U.S. soybeans, liquid natural gas, crude oil and possibly other products such as semiconductors. Speculation has also centred on potential reforms that the mainland Chinese government might be willing to undertake. However, none of these reports have been confirmed by official sources.

Meanwhile, a Politico article indicates that Beijing appears to be resisting other U.S. demands during ministerial level talks, including additional access to the mainland Chinese market and a provision that would allow the United States to reimpose tariffs if mainland China backtracks on any commitments it makes. Instead, officials appear to be holding out for an expected meeting between the presidents of the two countries that they believe offers “the best hope of reaching a trade agreement that would promise large Chinese purchases of US exports but avoid difficult structural reforms.” Nevertheless, President Trump continues to emphasise his demands for a “real deal.”

Content provided by Picture: HKTDC Research
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