Chinese, U.S. Trade Negotiators Inch Toward an Agreement
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met with President Xi
BEIJING—Chinese and U.S. trade negotiators concluded weeklong talks Friday, making some progress toward a broad agreement aimed at defusing the countries’ trade tensions, according to people with knowledge of the matter.
The agreement would be in the form of a memorandum of understanding and could serve as the framework for a deal that President Trump and Chinese leader Xi Jinping could later finalize at a summit, the people said. Negotiators on both sides have agreed to continue the talks next week in Washington, according to the people.
During negotiations this week in Beijing, officials on both sides have been seeking to narrow the still-substantial gap between the concessions China is willing to offer and what the Trump administration will accept.
The memorandum in the works is expected to cover issues related to Beijing’s offers to purchase more American goods and services, accelerating China’s market-opening efforts in sectors such as financial services and manufacturing, as well as improving its protection of U.S. intellectual-property rights.
Thornier issues like how to enforce a trade deal are also expected to be included in the memorandum, the people said.
U.S. Trade Representative Robert Lighthizer, the lead negotiator, and Treasury Secretary Steven Mnuchin met with President Xi on Friday afternoon before returning to Washington. The U.S. delegation is expected to release a statement on the latest negotiations.
Throughout the talks, sharp divisions remained on items such as how Beijing can address U.S. complaints that China pressures U.S. companies to share technology and that its policies favor state-owned companies at the expense of U.S. competitors.
The memorandum likely will mention those topics as well, but so far scant progress has been made toward narrowing those differences.
Washington and Beijing kicked off their latest round of trade negotiations on Monday, with discussions first held between midlevel officials at China’s Commerce Ministry. On Thursday, Messrs. Lighthizer and Mnuchin started a two-day session at the Diaoyutai State Guesthouse with Chinese Vice Premier Liu He and his team.
Both sides have hoped to hash out a framework for a deal, the people said, with the goal of clinching a pact at a meeting between Messrs. Trump and Xi. The date for such a summit hasn’t been set. Beijing has proposed that both leaders meet on China’s tropical island of Hainan this month. Mr. Trump and White house officials have said the U.S. leader hopes to hold the summit soon, but elsewhere. One venue floated by the U.S. administration is Mr. Trump’s Mar-a-Lago retreat in Palm Beach, Fla.
A memorandum of understanding with China could give the White House a rationale to extend the deadline for lifting tariffs on $200 billion of Chinese goods, now set for 12:01 a.m. ET, March 2, without wrestling any concrete concessions from China. Beijing, on the other hand, could say it received treatment similar to what Washington gave the European Union and Japan.
The Trump administration’s trade team, led by Mr. Lighthizer, has previously used broad, brief agreements to tamp down trade disputes with the European Union and Japan, while keeping tariffs on steel and aluminum imports from both areas.
In July, the EU and U.S. agreed to a 392-word statement saying the two sides would work to eliminate tariffs and other barriers on “non-auto industrial goods,” chemicals, pharmaceuticals, medical products and soybeans. Since then the talks have stalled, in part because the U.S. is pressing the EU to include more farm products in the talks.
In September, the U.S. and Japan released a 414-word statement saying they would start negotiations on a U.S.-Japan trade agreement. Washington demanded that the deal increase automobile production and jobs in the U.S. Japan insisted that it wouldn’t open its agricultural markets more than it has in other Japanese free-trade deals. Those talks have made some progress. In December, the U.S. Trade Representative’s office sent Congress a 14-page list of its negotiating objectives.
In both cases, though, the U.S. alleviated tensions with a trading partner by offering to move toward significant trade deals without lifting tariffs.
During the latest round of talks, Chinese officials have focused on ways to boost U.S. exports to China—a top priority for Mr. Trump. The U.S. leader has campaigned on cutting the country’s trade deficit with China and praised Beijing’s pledge to buy more American soybeans late last month.
Some of the offers made by China have been met with skepticism by both U.S. officials and companies.
For instance, Beijing proposed to increase U.S. semiconductor sales to China to a total of $200 billion over six years, or a level five times that of current exports, according to American companies briefed on the plan. But that would require U.S. firms to move assembly operations of U.S. semiconductors from third countries like Mexico and Malaysia, so that those products could be counted as U.S. exports rather than those of other countries.
The lead U.S. trade negotiator, Mr. Lighthizer, has been seeking more fundamental changes in the way Beijing runs its economy, such as eliminating coerced technology transfers and government subsidies to domestic companies. The latest Chinese proposals don’t appear to address those structural issues.