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US, China close in on trade deal, with Beijing offering to lower tariffs

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Beijing: China and the US are in the final stage of completing a trade deal, with Beijing offering to lower tariffs and other restrictions on American farm, chemical, auto and other products and Washington considering removing most, if not all, sanctions levied against Chinese products since last year.

The agreement is taking shape following February’s talks in Washington, people briefed on the matter on both sides said. They cautioned that hurdles remain, and each side faces possible resistance at home that the terms are too favourable to the other side.

 

Despite the remaining hurdles, the talks have progressed to the extent that a formal agreement could be reached at a summit between President Trump and Chinese President Xi Jinping, probably around March 27, after Mr Xi finishes a trip to Italy and France, individuals with knowledge of the plans said.

As part of a deal, China is pledging to help level the playing field, including speeding up the timetable for removing foreign-ownership limitations on car ventures and reducing tariffs on imported vehicles to below the current auto tariff of 15%.

Beijing would also step up purchases of goods—a tactic designed to appeal to President Trump, who campaigned on closing the bilateral trade deficit with China. One of the sweeteners would be an $18 billion natural-gas purchase from Cheniere Energy Inc., people familiar with the transaction said.

The two sides continue to negotiate over issues involving Chinese industrial policy the argues gives Chinese domestic firms an advantage, especially state-owned enterprises. Last week, Trade Representative Robert Lighthizer said the provisions involving protecting intellectual property total nearly 30 pages out of a working document of more than 100 pages.

Others involved in the talks said the is pressing Beijing to agree not to retaliate—at least in some cases—if the levies sanctions. That would be a big concession for Beijing negotiators, who say they want to make sure the deal doesn’t turn out to be an unequal treaty for China of the sort imposed by Western powers in the 19th century.

Even so, China hawks in the are concerned that enforcement measures may not be strong enough and will tie down the in endless talks.

“The whole process is a fraud,” said Derek Scissors, a China expert at the American Enterprise Institute, who argues the could better enforce its will by taking unilateral actions rather than getting hooked into consultations. Former White House strategist Steve Bannon urged the administration to increase tariffs to pressure China to agree to tougher terms even if that meant lengthier negotiations and market uncertainty.

“For Trump to get the structural reforms he wants and the country needs could take the rest of 2019 to negotiate,” Bannon said.

It isn’t yet clear whether conservative media, which has Trump’s ear, will pick up the criticism.

For the Chinese, linking the Florida visit to Xi’s European trip is a way to blunt the impression that he is traveling directly to Trump’s estate to make concessions.