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The
USTR provided no details on the areas of progress.
"They made headway on specific issues and the two sides are
close to finalizing some sections of the agreement. Discussions
will go on continuously at the deputy level, and the principals
will have another call in the near future," a statement said.
Washington and Beijing are working to agree on the text for a
"Phase 1" trade agreement announced by U.S. President Donald
Trump on Oct. 11. Trump has said he hopes to sign the deal with
China's President Xi Jinping next month at a summit in Chile.
In a separate statement posted on China's Ministry of Commerce
website on Saturday morning, Beijing confirmed "technical
consultations" on some parts of a trade agreement were basically
completed.
Agricultural products are a major area of discussion.
China's Commerce Ministry said both sides confirmed the United
States will import Chinese-made cooked poultry and catfish
products, while China will lift a ban on U.S. poultry.
Beijing wants the United States to cancel some existing U.S.
tariffs on Chinese imports, people briefed on the Friday call
told Reuters, in return for pledging to step up its purchases of
U.S. commodities like soybeans.
The United States wants Beijing to commit to buying these
products at a specific time and price, while Chinese buyers
would like the discretion to buy based on market conditions.
The world's two largest economies are trying to calm a nearly
16-month trade war that is roiling financial markets, disrupting
supply chains and slowing global economic growth. [nL2N2731RC]
"They want to make a deal very badly," Trump told reporters at
the White House on Friday. "They're going to be buying much more
farm products than anybody thought possible."
Trump agreed earlier this month to cancel an Oct. 15 increase in
tariffs on $250 billion in Chinese goods as part of a tentative
agreement on agricultural purchases, increased access to China's
financial services markets, improved protections for
intellectual property rights and a currency pact. [nL2N26W15C]
White House advisers are hoping to cement a binding, enforceable
agreement with Beijing, including a pledge not to force U.S.
companies to transfer technology to Chinese companies to do
business there.
TARIFFS TAKE THE LEAD
Beijing was expected to ask Washington during Friday's call to
drop its plan to impose tariffs on $156 billion worth of Chinese
goods, including cell phones, laptop computers and toys, on Dec.
15, two U.S.-based sources told Reuters.
Beijing is also seeking removal of 15% tariffs imposed on Sept.
1 on about $125 billion of Chinese goods, one of the sources
said. Trump imposed the tariffs in August after a failed round
of talks. "The Chinese want to get back to tariffs on just the
original $250 billion in goods," the source said.
U.S. farmers have been struggling since the trade war started.
In the decade before Trump took office, China’s purchases of
U.S. agriculture and related products tripled, reaching $25.2
billion in 2016. But they dropped to $13.2 billion in 2018,
after the U.S. put tariffs on hundreds of billions of dollars of
Chinese goods. (https://tmsnrt.rs/343C4kJ)
Derek Scissors, a resident scholar and China expert at the
American Enterprise Institute in Washington, said the original
goal of the early October talks was to finalize a text on
intellectual property, agriculture and market access to pave the
way for a postponement of the Dec. 15 tariffs.
Phase One will not cover U.S. allegations of Chinese hacking
into U.S. companies and government agencies, state subsidies,
Beijing's alleged dumping of lower-priced products on global
markets or China’s involvement in the fentanyl market, one
person briefed on the negotiations said.
An intellectual property rights chapter in the agreement largely
deals with copyright and trademark issues and pledges to curb
technology transfers that Beijing has already put into a new
investment law, people familiar with the discussions said.
A SCALED DOWN DEAL
If an agreement on China buying U.S. agricultural products can
be sealed, Beijing in return would exempt some U.S. agricultural
products from tariffs, including soybeans, wheat and corn, a
China-based source told Reuters.
But the ultimate amounts of China's purchases are uncertain.
Trump has touted purchases of $40 billion to $50 billion
annually - far above China's 2017 purchases of $19.5 billion as
measured by the American Farm Bureau.
One of the sources briefed on the talks said China's offer would
start at around $20 billion in annual purchases, largely
restoring the pre-trade-war status quo, but this could rise over
time. Purchases also would depend on market conditions and
pricing.
USTR head Robert Lighthizer has emphasized China's agreement to
remove some restrictions on U.S. genetically modified crops and
other food safety barriers, which U.S. sources say could pave
the way for much higher U.S. farm exports to China.
Friday's high-level call came a day after U.S. Vice President
Mike Pence railed against China's trade practices and what he
termed construction of a "surveillance state" in a major policy
speech. But Pence left the door open to a trade deal with China,
saying Trump wanted a "constructive" relationship with Beijing.
[nL2N27901G]
While the U.S. tariffs on Chinese goods have brought Beijing to
the negotiating table to address U.S. grievances over trade and
intellectual property practices, they have not sparked
significant change in China's state-led economic model.
Some China trade experts said that a completion of a Phase 1
deal could leave little incentive for China to negotiate
further, especially with a U.S. election in 2020.
"U.S.-China talks change very quickly from hot to cold but, the
longer it takes to nail down the easy Phase 1, the harder it is
to imagine a Phase 2 breakthrough," said Scissors.
(Additional reporting by Heather Timmons and Jonathan Landay in
Washington, Hallie Gu in Beijing, Winni Zhou and Li Hongwei in
Shanghai; editing by Heather Timmons, Simon Cameron-Moore, Dan
Grebler, Cynthia Osterman and Lincoln Feast.)
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