“We have much work to do if we’re going to have an agreement, but we made substantial progress,” U.S. Trade Representative Robert Lighthizer said Thursday, according to a readout of a public portion of the meeting. “We focused on the most important issues, which are the structural issues and the protection of U.S. intellectual property, stopping forced technology transfer, intellectual property protection, agriculture and services issues, and enforcement, enforcement, enforcement.”
The U.S. started imposing tariffs on goods from China last summer, after the Office of the U.S. Trade Representative conducted a Section 301 investigation concluded that China engages in unfair commercial practices against U.S. businesses, including forced technology transfer and IP theft.
Lighthizer added that the Trump administration and Beijing are “more or less in continuous negotiations” and that, while it’s impossible for him to predict success, “we are in a place that, if things work, it could happen.”
The U.S. currently is collecting 25 percent tariffs on $50 billion worth of goods from China in 2017 import value.
Current tariffs across another $200 billion worth of goods from China were set to raise from 10 percent to 25 percent on Jan. 1, but President Donald Trump and Chinese President Xi Jinping on Dec. 1 agreed to postpone those additional tariffs until March 2 as both countries seek to resolve issues through dialogue.
During the meeting Thursday, Trump said the U.S. and China at some point would discuss issues associated with Chinese telecom giant Huawei, which recently was indicted in federal court on 10 counts related to alleged theft of trade secrets.
“We haven’t discussed that yet,” Trump said. “It will be, but it hasn’t been discussed yet.”
Trump added that the countries haven’t talked about extending the deadline for talks past March 1 and that he doesn’t think it has to be extended.
The White House statement said U.S. tariffs will increase unless Washington and Beijing reach a “satisfactory outcome” by March 1.
“We have to get this put on paper at some point if we agree,” he said. “There are some points that we don’t agree to yet, but I think we will agree. I think, when President Xi and myself meet, every point will be agreed to.”
In addition to IP-related issues, officials this week discussed the “numerous” tariff and non-tariff barriers faced by U.S. companies in China, China’s cyber-theft of U.S. commercial property, how subsidies and state-owned enterprises can lead to excess capacity, the role of currency in the bilateral trade relationship and the United States’ growing trade deficit with China, according to the White House.
It’s going to take several months to ascertain whether China is following through on any commitments they might make during these discussions, Brookings Institution senior fellow David Dollar said during a Washington International Trade Association (WITA) conference on Tuesday.
While the Trump administration is putting a lot of emphasis on accountability, the Bush and Obama administrations used follow-up mechanisms to check up on progress following discussions with China, but saw no radical change in China’s practices, Dollar said.
The traditional Asian economic model includes a capital investment regime driven by heavy subsidization, and China simply doesn’t know any other way, David Goldman, an economist and principal of Asia Times Holdings, said during the WITA conference.
“If we insist on eliminating this, and we try to use tariffs to do it, that will probably have a collapse in world trade,” Goldman said. “The administration has learned that there are losses to be had, and they don’t want this. So I think what we’ll get as a short-term solution is the kind of deal the Chinese are prepared to offer. That leaves us with a long-term problem and a set of very unpleasant choices.”
The U.S. should compete by employing a Cold War-style economic strategy to deal with China, to involve an aggressive production strategy for cutting-edge technologies such as 5G and future weapons systems, which will increasingly need silicon, Goldman said.
“Smart ships … use artificial intelligence, and if we can’t produce the silicon at home, it’ll be like the 19th century military power that can’t produce its own cannon,” he said.
In terms of the U.S.-China bilateral relationship, a trade war has added complication to a slumping Chinese economy, and Beijing has a very strong incentive to make some kind of deal with Washington, which could include allowing more foreign investment in China, Dollar said.
During the White House meeting, Treasury Secretary Steven Mnuchin said there is a tentative date set for him and Lighthizer to lead a U.S. trade delegation to China to continue discussions with their Chinese counterparts, but didn’t provide the date.
“We want to make a deal that we can look at and be proud of for many years — not where we have to go back and renegotiate or we left things out,” Trump said.