Washington’s chief trade negotiator said on Wednesday there remained much to do before reaching a new trade agreement with China, even as both sides signal their talks are nearing the finish line.
After months of negotiating with Beijing, “now we are making real progress,” US Trade Representative Robert Lighthizer said in congressional testimony, agency reports.
However, “much still needs to be done both before an agreement is reached and more importantly after it is reached if one is reached.”
Lighthizer’s remarks to a House committee underscored the remaining hurdles facing negotiators despite the apparent eagerness on both sides to bring their eight-month trade war to an end.
Citing “substantial progress,” President Donald Trump on Sunday said he would postpone a sharp increase in US duties on $200 billion in Chinese imports while the two sides worked to reach an agreement.
He said the final details would be hashed out before a “signing summit” with Chinese President Xi Jinping at an unspecified future date. Along with Japanese and European officials, the United States accuses China of entrenched unfair trade practices, including massive state intervention in markets, subsidies and the theft of foreign technology.
Chinese officials have offered to increase purchases of American farm goods and energy exports but it remains unclear whether Beijing will give in to US demands for fundamental changes in industrial policy, which analysts say could weaken the communist party’s power. Lighthizer’s testimony coincided with other headline-grabbing appearances on Capitol Hill, with Federal Reserve Chairman Jerome Powell and former Trump attorney Michael Cohen also appearing.
But Lighthizer’s remark about the remaining work needed in the China negotiations helped send Wall Street lower. Stock prices recovered some of those losses but major indices finished the day mostly lower.
“I don’t think the market is really taking that seriously,” Adam Sarhan of 50 Park Investments told AFP, adding that investors were not unduly worried.
“It is pulling back after a recent rally,” Appearing before the House Ways and Means Committee — which writes tax laws — Lighthizer faced queries during the lengthy hearing from about three dozen lawmakers from across the United States on broad array of matters under negotiation. Lighthizer said he appreciated the hardships US firms — exporters and importers — have suffered in the trade war, and praised Trump for withstanding the political fallout to pursue a difficult trade policy. “Because of his insight and grit, we are in a position to deal with this problem for the first time after decades of government inaction,” he said.
Unlike US trade skirmishes with Canada, Mexico, the European Union and others, the hearing showed there was support for the China confrontation among Democrats and Republicans. “The fact that it’s bipartisan is why we’re making success,” Lighthizer said.
He stressed that any agreement must have teeth, and provide for the ability to take “proportional action unilaterally” in the event that China failed to live up to its end of the bargain.
“This enforcement process, if we have an agreement… will be very specific,” Lighthizer said. “It’ll have layers. It’ll have timeframes and there will be reaction.”
After exchanging punitive tariffs on more than $360 billion in total two- way trade, Trump and Xi declared a truce in December and agreed to hold off on further tariffs or retaliation for 90 days.
The United States had been poised to more than double the tariffs on the most recent and largest round of Chinese exports on Saturday.
But according to Lighthizer’s office, those increases will remain suspended “until further notice.”
Analysts say the two sides are likely to trumpet mutual agreements to resolve the easier parts of the trade dispute — increasing purchases of American goods, more open investment in China and tougher protections for intellectual property and proprietary technology.
The harder parts covering issues like scaling back China’s ambitious industrial strategy for global preeminence, are another question.