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This Week In Trade

Eyeing endgame, Lighthizer and Mnuchin head to China

Posted: April 29, 2019

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin travel to Beijing this week hoping to wrap up negotiations with their counterparts as the two sides iron out differences over tariff reductions and enforcement.

The two sides must still agree on the schedule of tariff reductions and the specifics of an enforcement mechanism. The U.S. has pushed for “snap back” tariffs, but analysts have questioned their viability and World Trade Organization compatibility.

Over the weekend President Trump said the talks with China were going “very well,” but did not say whether he thought the two sides would reach a final deal soon. “We're doing very well in our negotiations with China,” he told reporters while meeting with Japanese Prime Minister Shinzo Abe. “Some of our people are leaving for China on Monday. And we're getting there. It could be very interesting. We'll see. I don't like to talk about things, and I won't talk about things because who knows what happens. Lots of strange things can happen for better or worse.”

 Any deal reached by the negotiating principles will have to be consummated by President Trump and Chinese President Xi Jinping. Trump has said that “if we have a deal, then we’ll have a summit.” He has also said Xi will visit the White House soon, though no details have been announced. The South China Morning Post reported that Xi could travel to Washington as early as June to finalize a deal.

Mnuchin on Sunday said the U.S.-China talks were in the “final laps,” according to The New York Times. He also said this week’s talks would focus on China’s industrial subsidy policies and that significant progress has been made on an enforcement mechanism.

Trump and Abe discussed trade during the prime minister's visit to Washington, DC, which concluded on Saturday. Japanese Economy Minister Toshimitsu Motegi also met U.S. Trade Representative Robert Lighthizer on Thursday for a second round of high-level talks.

“We have a very big trade negotiation going on right now with Japan, which is, I would imagine, the primary reason that the Prime Minister is here,” Trump said on April 26. After the meeting and a round of golf on Saturday, Trump said “Our trade relationship with Japan is very good. There's been some weaknesses in it for many years, and we're getting those weaknesses straightened out.”

Following Saturday's meeting, Trump claimed that Japan had committed to buying “a tremendous amount of military equipment.” In an April 27 joint statement, the leaders said a range of economic issues were discussed, including “priorities for the June G20 meeting in Osaka, Japan, and reviewed the state of bilateral trade negotiations.”

 The ongoing negotiations with China will be the central focus of discussion in Washington trade circles this week even with Lighthizer 12 time zones ahead. The U.S. Chamber of Commerce will host its 10th “China Business Conference” on Tuesday and Wednesday. Jeremie Waterman, the president of the Chamber’s China Center, and Tim Stratford, the managing partner of Covington & Burling’s Beijing office and chairman of AmCham China, will deliver opening remarks. Speakers will include two former USTRs, Charlene Barshefsky and Susan Schwab; Deputy WTO Director-General Alan Wolff; Wang Huiyao, the founder and president of the Center for China and Globalization; Deputy Under Secretary of Defense for Acquisition and Sustainment Alan Shaffer; Keita Nishiyama, the director-general of Japan’s Ministry of Economy, Trade and Industry; Helena König, the deputy director-general of the EU Commission’s trade department; and others.

The Democracy Journal will also host a panel on U.S.-China relations on Wednesday. Brookings Institution senior fellow David Dollar, Council on Foreign Relations director for Asia Studies Elizabeth Economy, and Rebecca Liao, the executive vice president at Skuchain, will take part.

The Farm Foundation will host a conference on sanitary and phytosanitary barriers on Tuesday. WTO Director-General Roberto Azevêdo will give a video address. Alan Wolff will take part in a discussion on the WTO and U.S. agriculture with the Peterson Institute’s Chad Bown, the International Food Policy Research Institute’s Joe Glauber, and Nanyang Technological University’s Evan Rogerson. Agriculture Under Secretary Ted McKinney and USTR Chief Agriculture Negotiator Gregg Doud will also participate in a discussion on the government’s approach to agricultural trade.

Senate Finance Committee Chairman Chuck Grassley on Monday reiterated that Trump’s Section 232 tariffs on steel and aluminum threaten the passage of the U.S.-Mexico-Canada Agreement and argued for the tariffs to be lifted.

India’s Ambassador to the U.S., Harsh Vardham Shringla, will discuss the state of U.S.-India relations at the Carnegie Endowment for International Peace on Tuesday. The discussion comes as India and Turkey’s benefits under the Generalized System of Preferences are set to expire on Friday. India has asked for a 90-day extension for the program, which provides duty-free treatment to certain goods. Some business groups and U.S. senators have called for India to receive an extension, but USTR has reportedly deferred the decision to a “higher level.” -- Brett Fortnam (bfortnam@iwpnews.com) with Isabelle Hoagland (ihoagland@iwpnews.com)