INSUBCONTINENT EXCLUSIVE:
WASHINGTON: United States and Chinese trade officials are "close to finalizing" some parts of an agreement after high-level telephone
discussions on Friday, the United States Trade Representative's office said, adding that deputy-level talks would proceed
"continuously."
In a statement issued after the call, 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," it said.
The call
came as Washington and Beijing are working to agree on the text for a "Phase 1" trade agreement announced by United States President Donald
Trump has said he hopes to sign the deal with China's President Xi Jinping next month at a summit in Chile.
Beijing was expected to
request cancellation of some planned and existing United States tariffs on Chinese imports during the phone call, people briefed on the
negotiations told Reuters.
In return, China was expected to pledge to step up its purchases of United States agricultural products.
The
world's two largest economies are trying to calm a nearly 16-month trade war that is roiling financial markets, disrupting supply chains
and slowing global economic growth.
"They want to make a deal very badly," Trump told reporters at the White House
"They're going to be buying much more farm products than anybody thought possible."
So far, Trump has agreed only to cancel an Oct
15 increase in tariffs on $250 billion in Chinese goods as part of understandings reached on agricultural purchases, increased access to
China's financial services markets, improved protections for intellectual property rights and a currency pact.
But to seal the deal,
Beijing is expected to ask Washington to drop its plan to impose tariffs on $156 billion worth of Chinese goods, including cell phones,
laptop computers and toys, on Dec
15, two United States -based sources told Reuters.
Beijing also is likely to seek removal of 15% tariffs imposed on Sept
1 on about $125 billion of Chinese goods, one of the sources said
Trump imposed the tariffs in August after a failed round of talks, effectively setting up punitive duties on nearly all of the $550 billion
in United States imports from China.
"The Chinese want to get back to tariffs on just the original $250 billion in goods," the source
said.
Derek Scissors, a resident scholar and China expert at the American Enterprise Institute in Washington, said the original goal of the
early October talks was to finalize a text on intellectual property, agriculture and market access to pave the way for a postponement of the
15 tariffs.
"It's odd that (the president) was so upbeat with (Chinese Vice-Premier) Liu He and yet we still don't have the Dec
15 tariffs taken off the table," Scissors said.
United States Treasury Secretary Steven Mnuchin last week said no decisions were made about
15 tariffs, but added: "We'll address that as we continue to have conversations."
SMALLER PURCHASES?
If a text can be sealed, Beijing in
return would exempt some United States agricultural products from tariffs, including soybeans, wheat and corn, a China-based source told
Buyers would be exempt from extra tariffs for future buying and get returns for tariffs they already paid in previous purchases of the
products on the list.
But the ultimate amounts of China's purchases are uncertain.
Trump has touted purchases of $40 billion to $50
billion annually - far above China's 2017 purchases of $19.5 billion as measured by the American Farm Bureau.
One of the sources briefed
on the talks said China's offer would start at around $20 billion in annual purchases, largely restoring the pre-trade-war status quo, but
this could rise over time
Purchases also would depend on market conditions and pricing.
United States Trade Representative Robert Lighthizer has emphasized China's
agreement to remove some restrictions on United States genetically modified crops and other food safety barriers, which the sources said is
significant because it could pave the way for much higher United States farm exports to China.
The high-level call came a day after United
States Vice President Mike Pence railed against China's trade practices and what he termed construction of a "surveillance state" in a
But Pence left the door open to a trade deal with China, saying Trump wanted a "constructive" relationship with Beijing.
While the United
States tariffs on Chinese goods has brought China to the negotiating table to address United States grievances over its trade practices
and intellectual property practices, they have so far failed to lead to significant change in China's state-led economic model.
The "Phase
1" deal will ease tensions and provide some market stability, but is expected to do little to deal with core United States complaints about
Chinese theft and forced transfer of American intellectual property and technology
The intellectual property rights chapter in the agreement largely deals with copyright and trademark issues and pledges to curb technology
transfers that Beijing has already put into a new investment law, people familiar with the discussions said.
More difficult issues,
including data restrictions, China's cybersecurity regulations and industrial subsidies will be left for later phases of talks
But some China trade experts said that a completion of a Phase 1 deal could leave little incentive for China to negotiate further,
especially with a United States election in 2020.
"United States -China talks change very quickly from hot to cold but, the longer it takes
to nail down the easy phase 1, the harder it is to imagine a phase 2 breakthrough," said Scissors.
