Trade deal skepticism rises

Via the Politco:

U.S. Trade Representative Robert Lighthizer told top business executives on Monday that there is still much work to be done to reach a trade deal with China despite the two sides having been close to an agreement earlier this year, said U.S. Chamber of Commerce CEO Tom Donohue.

“He laid it out by saying this is an extraordinary challenge, and when it all fell apart some months ago they were very, very close to a workable agreement,” Donohue said at a press conference Monday.

The Chamber chief said Lighthizer didn’t mention the possibility of an interim deal that could deescalate trade tensions by further delaying tariff escalation. President Donald Trump is expected to increase tariffs on $250 billion worth of Chinese goods in mid-October after a two-week delay. Another round of U.S. tariffs is coming Dec. 15 on virtually all remaining imports from China, including on consumer goods like laptops and mobile phones.

Deputy-level trade officials from the U.S. and China will meet on Friday to prepare for an early October meeting between Lighthizer, Treasury Secretary Steven Mnuchin, Chinese Vice Premier Liu He and other senior Chinese officials.

It’s still unclear on what basis the U.S. and China will resume talks. Negotiations broke down in early May after the U.S. side said Beijing balked at American demands that it enshrine in domestic law major changes to address the administration’s core concerns regarding intellectual property and forced technology transfer. When Lighthizer and Mnuchin traveled to Shanghai in July, China made no moves toward addressing U.S. demands, further angering Trump.

“He was pretty clear that we have to do this one step at a time but that this has to be real agreement,” Donohue said, referring to Lighthizer.

Lighthizer told the group of business leaders that there has been some positive movement by China to increase purchase of U.S. agricultural goods. Trump has made an increase in Chinese purchases of U.S. farm goods a key demand, to ease Beijing‘s retaliation on U.S. farmers.

“I don‘t think you’re going to see the tariffs going away and people feeling we’ve made a great accomplishment until we have a real agreement,” said Donohue. “A real agreement, in my opinion, will not be buying more crops and doing the small things that would be good to set the stage for us to have more substantive conversations.“

That’s a pretty good source. Sinocism agrees:

Vice Minister of Finance Liao Min and Vice Minister of Commerce Wang Shouwen are leading the PRC delegation to DC this week, with talks I hear scheduled to start Wednesday the 18th. There is increasing chatter about an interim deal by October that relieves some of the political pressures on both sides, but I am still very skeptical of any major breakthroughs. China did announce last week that it would exclude soybeans and pork from additional tariffs, and while that is a goodwill gesture to the US it is also worth remembering that China is in the midst of a pork crisis and so desperately needs to import more of the meat.

I expect little because there is little to expect,

David Llewellyn-Smith
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