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This Week In Trade

As Lighthizer prepares to testify, Trump says 'we truly are very close' to a deal with China

Posted: February 25, 2019

After President Trump last night made official his plan to delay an increase in tariffs on Chinese goods, he told U.S. governors a deal with Beijing was “very close” -- and appeared to go out of his way to praise his top trade negotiator, Robert Lighthizer, after reports suggesting the two were at odds.

The U.S. Trade Representative will make a rare appearance before lawmakers on Wednesday when the House Ways & Means Committee will question him about U.S.-China trade.

Talks with the Chinese, Trump said at a National Governors Association event, were going well enough to suggest a deal was in the offing. He had earlier tweeted the news of the tariff hike delay. Chinese negotiators led by Vice Premier Liu He, he noted, were heading back to China, “and if all works well, we’re going to have some very big news over the next week or two. And it’s really been terrific.”

“We want to make a deal that’s great for both countries and that’s really what we’re going to be doing,” Trump added, “and I think as governors, most of you, many of you are governors and doing an incredible job, and so many have come up and said, ‘How are you doing with China?’ which is a very unusual question for people to come up and ask, almost everyone. ‘Sir, how are you doing with China?’ because it affects your state so much.”

“China is everywhere and I think you’d really be amazed with what you see,” he continued. “Maybe. Let’s see what happens. We still have a little ways to go.”

Calling on U.S. Trade Representative Robert Lighthizer, who was in the room, Trump said, “Would you say that’s correct, Mr Ambassador? We have a little bit. But I want thank you, Bob, you’ve been working 24 hours around the clock and I will say this publicly, when I was able to be lucky enough to win the presidency I called Bob Lighthizer because for years people have known he’s the greatest trader that we have on this type of trade -- we have many different types of trade -- and I really understand now why. Thank you very much. Fantastic.”

On Friday, Trump and Lighthizer went back and forth about the definition -- and importance -- of a memorandum of understanding, several of which were in negotiation between the U.S. and China. The exchange was widely reported as a skirmish in which the president upbraided Lighthizer; others claimed the USTR lectured his boss and got an earful in return.

But Lighthizer's remarks on MOUs as binding contracts were directed at the reporters behind him, not at the president. And while Trump did say he disagreed with his trade negotiator about whether MOUs were binding, his comments and questions appeared more designed to reach consensus than upbraid Lighthizer.

According to the Wall Street Journal, the reaction to the interaction in the Oval Office led U.S. trade officials to try to “knock down speculation of a split on China policy” between the two.

“The dispute was less significant than it appeared, according to people familiar with the discussions, and mainly involved a disagreement over terminology,” the paper reported. “Mr. Trump was trying to make clear that he wasn’t interested in a short-term agreement; rather, he wanted a longer-term deal, these people said. Mr. Trump’s understanding of an MOU comes from his experience in real estate, where an MOU is preliminary to a deal, they said.”

Lighthizer, meanwhile, was trying to make clear that the trade deal -- whatever it was called -- would not be of the kind that would require congressional approval, even though it would be comprehensive. “One of the individuals said that the MOUs in draft form are very detailed and could total 100 pages,” the Journal said.

Lighthizer closed the exchange on Friday by insisting that the term MOU would no longer be used to describe the agreement with China, which he said was not a guarantee.

Nonetheless, Trump's tariff delay sparked a rally in China's stock market; CNN reported it had its “best day in more than three years” on Monday.

Governors and administration officials will be discussing trade and related issues at an “Invest in America” event in Washington, DC, on Monday. White House economic adviser Kevin Hassett, Commerce Secretary Wilbur Ross and others are slated to participate.

Another top economic adviser, Larry Kudlow, told governors on Sunday that he expected a dispute with Canada and Mexico over Section 232 tariffs on steel and aluminum would “get … done and we will get it done to everyone’s satisfaction. Trust me.” He also urged governors to help push Congress to approve the U.S.-Mexico-Canada Agreement and improve U.S. leverage in dealing with China.

Lighthizer's appearance before the House Ways & Means panel on Wednesday will be his first in front of a congressional committee led by Democrats. The enforceability of any deal with China is sure to be a key topic.

While Lighthizer is testifying on Feb. 27, his office will be running a meeting of the Special 301 subcommittee assessing “countries that deny adequate and effective protection of intellectual property rights (IPR) or deny fair and equitable market access to U.S. persons who rely on intellectual property protection.” If necessary, USTR announced, the hearing could extend to a second day.

And on Thursday, the U.S.-China Economic and Security Review Commission will hold a hearing titled “Risks, Rewards, and Results: U.S. Companies in China and Chinese Companies in the United States."

Other events of note this week:

  • On Tuesday, the U.S. International Trade Commission holds a meeting “for the purpose of providing a report that catalogs trade-related barriers that small and medium-sized enterprises (SMEs) perceive as disproportionately affecting U.S. SMEs exporting to the United Kingdom (UK), compared to larger U.S. exporters to the UK.”
  • The Senate Banking Committee will again vote on President Trump’s nominees for the Export-Import Bank’s board.
  • NetChoice, a “trade association of eCommerce businesses,” holds a discussion titled “Section 230: Our Internet Depends on It,” focusing on “the impact of legislation on user created content and its utility to consumers."
  • The George Washington University Elliott School of International Affairs holds a discussion on “Prospects for Latin America in a World of Uncertainty,” including “trade disruptions.” Former Colombian Minister of Finance Mauricio Cardenas will speak.
  • On Wednesday, the Center for Strategic and International Studies will conduct a forum on “A Positive Trade Agenda: Affirming America's Leadership for the 21st Century.” Among the participants will be former Treasury Secretary Henry Paulson and former U.S. Trade Representative Susan Schwab, who will discuss “a world of 'three zeroes': zero tariffs, zero subsidies and zero non-tariff barriers to trade/.”
  • On Thursday, the House Agriculture Committee will question Agriculture Secretary Sonny Perdue about “the state of the rural economy.”
  • Thursday is also the due date for an ITC report on the economic impact of a U.S.-Japan free trade deal. It was delayed by the partial government shutdown and will be submitted along with another report on the impact of removing certain agriculture tariffs.
  • The Center for Strategic and International Studies will discuss “China's Pursuit of Semiconductor Independence” with Erin Ennis, senior vice president of the U.S.-China Business Council; Rob Atkinson, president of the Information Technology and Innovation Foundation; and James Lewis, director of the CSIS Technology Policy Program.
  • The Business Council for International Understanding will hold a briefing on “U.S.-India commercial ties, trade and bilateral investment opportunities” with Puneet Kundal, the commerce minister at the Embassy of India.
  • On Friday, the Washington International Trade Association will hold a discussion on the 2019 congressional trade agenda with majority and minority staff members of the House Ways & Means and Senate Finance committees. -- Dan Dupont (ddupont@iwpnews.com)