U.S.-China Trade Deal Isn't Imminent, Envoy Says -- Update
03/08/19 05:22 AM EST
By Lingling Wei and Jeremy Page
morningstar.com
BEIJING--The U.S. and China have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China said Friday, as neither side feels an agreement is imminent.
"A date hasn't been finalized" for a meeting between President Trump and Chinese leader Xi Jinping, Terry Branstad, the U.S. envoy to Beijing, said in an interview with The Wall Street Journal. He said preparations for such a meeting aren't yet under way either.
Mr. Branstad said negotiators need to further narrow the gap in their positions, including on enforcement of an eventual deal, before summit arrangements are made.
"Both sides agree that there has to be significant progress, meaning a feeling that they're very close before that happens," Mr. Branstad said in his office at the U.S. embassy in Beijing. "We're not there yet. But we're closer than we've been for a very long time."
Mr. Branstad's remarks add to growing doubt that Washington and Beijing can speedily resolve their yearlong trade battle that has rattled global markets and businesses.
Trade negotiators in the world's two largest economies in recent weeks have been trying to put together a trade agreement for their presidents to clinch face to face. Progress made in talks last month led both sides to discuss holding the summit this month, possibly around March 27 in Florida, after Mr. Xi finishes a trip to Italy and France.
In recent days, especially after Mr. Trump's failed meeting in Vietnam with North Korean leader Kim Jong Un, senior Chinese officials have become increasingly wary of agreeing to a summit without a guarantee from Washington on a final deal, according to people familiar with the leadership's thinking.
Remarks by some White House officials also suggest that any meeting between the two leaders could be delayed into next month.
Speaking on Fox News on Tuesday, White House economic adviser Larry Kudlow said "there is hope that perhaps by the end of this month or early April the two leaders will get together and finalize an agreement." He then said: "Don't hold me to that because it's not written in cement yet."
For a summit, the Chinese side wants more of a signing ceremony than a final negotiation, fearing Mr. Trump could make last-minute demands, said the people familiar with the leadership's thinking. Mr. Branstad suggested U.S. officials want some leeway at the summit.
The U.S. side aims to have "the agreement pretty much worked out, and maybe a few final touches, or final things resolved by the two leaders," he said, adding there was "good chemistry" between the two men.
"It has been a long and difficult process," the U.S. ambassador said of the negotiations. More positively, he said: "Considerable progress has been made. So I'm more hopeful now than I've been throughout the last year that we can see an effective agreement reached."
As part of the potential deal, Beijing so far has offered to purchase more U.S. agricultural and energy products, allow American businesses greater access to certain sectors such as financial services and autos, and improve the protection of U.S. intellectual-property rights.
Mindful of what it sees as China's poor follow-up record, Washington also is pressing for an enforcement mechanism to ensure Beijing keeps its promises. The plan under discussion calls for meetings of officials from both countries to adjudicate disputes. If those don't produce agreement, U.S. Trade Representative Robert Lighthizer has said the U.S. would then impose tariffs.
It is unclear if Beijing has agreed not to retaliate--at least in some cases--should the U.S. take such actions. That would be a big concession for Beijing, as the leadership fears being criticized domestically for agreeing to an "unequal treaty" of the sort imposed by Western powers in the 19th century.
"That's been a challenge and a problem that the Chinese did indeed retaliate," Mr. Branstad said, referring to the sanctions Beijing imposed on American products in response to the U.S. tariffs last year.
Another disagreement involves subsidies and other government support that the U.S. argues gives Chinese domestic firms an advantage, especially state-owned enterprises. In a key national address this week, Chinese Premier Li Keqiang dropped any mention of "Made in China 2025," a policy savaged by the Trump administration as protectionist. Mr. Li, however, committed the government to nurturing key emerging industries--the same goals as "Made in China 2025."
In the interview, Mr. Branstad sought to play down expectations the Communist Party would agree to significant changes in China's industrial policy as part of the trade deal. "We've got to be realistic that this is a one-party authoritarian system. We don't' see that changing."
Another priority for the U.S., Mr. Branstad said, is getting Beijing to honor its commitment to label fentanyl, the powerful opioid responsible for a rising number of American drug deaths, a controlled substance. Mr. Xi made the promise during a meeting with Mr. Trump in December. Such a move could help stem fentanyl flowing into the U.S.
"As recently as yesterday, I was assured by the Chinese minister of foreign affairs that's a commitment they intend to abide by and implement," Mr. Branstad said.
Mr. Branstad dismissed suggestions that U.S. concerns about Huawei Technologies Co. would figure in any trade deal. The Trump administration has sought to dissuade allies and others from using Huawei networking equipment, citing security risks. It is also pursuing the extradition of Huawei's chief financial officer from Canada on bank fraud charges related to sanctions violations.
Mr. Branstad denied that as part of a deal the U.S. would drop its case against the executive, Meng Wanzhou. "It is really a separate issue and it's really in the hands of the Southern District of New York, certainly not with the president," said Mr. Branstad.
Huawei has mounted an aggressive strategy, filing a lawsuit this week challenging a U.S. government ban on using the company's gear and accusing the U.S. of hacking into the company's servers, stealing source code and monitoring its emails.
Mr. Branstad said Huawei's lawsuit looked "retaliatory," comparing it to China's detention of two Canadian citizens after Ms. Meng's arrest. On the company's allegations of U.S. hacking, "coming from Huawei, that's very interesting," said Mr. Branstad. "They're the ones that have been accused of doing that all over the world."
Bob Davis in Washington contributed to this article.
Write to Lingling Wei at lingling.wei@wsj.com and Jeremy Page at jeremy.page@wsj.com (END) Dow Jones Newswires
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