The United States will not resume trade negotiations without a firm Chinese proposal
The United States will not resume trade negotiations without a firm Chinese proposal
The United States is refusing to resume trade negotiations with China until Beijing presents a concrete proposal to address Washington's complaints about forced technology transfers and other economic issues, officials on both sides of the Pacific said.
The impasse threatens to undermine a meeting between Presidents Trump and Xi Jinping scheduled for the end of November at the summit of the group of 20 leaders in Buenos Aires. Both parties had hoped that the meeting would ease trade tensions. US companies have had sufficient progress in the meeting for the Trump administration to suspend its plan to increase tariffs on $ 200 billion of Chinese imports to 25% on January 1, from the current 10%. Such a move would be a blow to US importers and consumers.
Negotiations have been suspended since mid-September, when the Chinese canceled a trip to Washington after the United States announced taxes on the $ 200 billion of Chinese imports. Since then, Beijing has tried to re-engage, including asking US Deputy Secretary of the Treasury David Malpass to resume talks. He refused, with the backing of the White House business team, until the Chinese submit a formal offer, US officials said.
Defense Secretary Jim Mattis canceled a trip to China, and President Trump accused China of electoral interference. Gerald F. Seib of the WSJ explains how tensions between the United States and China are increasing. Stock Photo: Getty
"If China wants [the G-20 session] To be a meaningful meeting, we need to do grassroots work, "said a senior White House official. "And if they do not give us any information, it's hard to see how it becomes fruitful."
For Beijing, making a formal offer presents a series of risks, according to individuals informed by the Chinese. First, it would reveal its negotiating position. Secondly, Beijing fears that Mr. Trump could make public any offer in a tweet or a statement as a way to secure any concession from China.
There is history behind Beijing's concerns. During the negotiations on China's entry into the World Trade Organization in 1999, President Clinton rejected an offer by China's prime minister at the time, Zhu Rongji, which included deep concessions and a reorganization of the Chinese economy. The Clinton administration made public Mr. Zhu's offer, hoping to keep the Chinese from backing down. Instead, Mr. Zhu was ridiculed at home by the hardliners, and it took months of negotiations to finally convince China to accept an agreement similar to the one initially offered.
China's ambassador to the United States, Cui Tiankai, said Beijing wanted more discussions before presenting a specific offer. "People have to sit together," Cui said in an interview. "Then each side must make its own proposal."
He said Beijing is wary of negotiating with the Trump government because Trump rejected several earlier offers after other high-level negotiators in the United States indicated they would be accepted. "You can not have a provisional agreement one day and reject it the next day," he said.
Craig Allen, president of the US and China Business Council, a trade group of major US firms, said he recently met with senior Chinese officials and also urged them to submit a written proposal. He said they were not yet ready to do so and were seeking "a guarantee" that if they did, the United States would reduce tariffs on Chinese imports. The officials of the United States have not indicated that they are willing to do so.
The United States is concerned that China will extend the negotiations and try to obtain promises from Mr. Trump in an individual session with Mr. Xi. That would produce agreements that "commit to things that sound good but are not significant," said the senior White House official, adding that Mr. Trump would not fall into such a trap. The Chinese are well known for carefully preparing for meetings, while Mr. Trump often trusts his instincts.
Since the spring, the two sides have discussed the elements of an agreement. During the May talks in Beijing, US negotiators gave their Chinese counterparts an eight-point list of demands, ranging from halving the trade deficit of $ 376 billion to cutting much of China's subsidies for high-tech industries.
The Chinese divided the demands of the United States into 142 separate items, which they then classified into three categories, said individuals informed about the Chinese discussions. Of the demands, 30% to 40% could be made immediately; another 30% to 40% could be negotiated in time; and 20% were out of bounds because they implied national security or other sensitive issues, they said. Informally called "80/20 plan" or "60/20/20 plan", the idea was presented to the United States in the negotiations in mid-August, officials from the United States and China said.
However, the Chinese negotiators did not disclose the elements in each of the three categories, apart from saying that 122 of the 142 elements were considered negotiable, and did not say how the individual elements would be handled. Rather, the proposal was of a "conceptual" nature, said US officials, who argue that this is not enough. They want a concrete and detailed offer that addresses the concerns of the United States.
"Show us your list," said the senior White House official, or negotiations would not take place before the G-20.
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We need to find a way to trust, but check and make sure we do not give up all the leverage at the end of the meeting.
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Beijing answers that the USA UU They have the sequence back, and that an offer must follow the conversations. "We are not sure if the United States side is really serious about these so-called structural problems in more detail because there is no meeting," said Ambassador Cui.
All of which has led to the current stalemate. Any negotiation is destined to face many obstacles. For example, the USA UU They are looking for ways to enforce any agreement that may include leaving some tariffs in effect until China delivers on its promises. Alternatively, the US UU They could impose more tariffs if China falls short.
"We need to find a way to trust, but verify," said the senior White House official in the United States, "and make sure we do not give up all influence at the end of the meeting."
Beijing is also trying to show that it is taking complaints about its trade policies seriously and is organizing a big import promotion fair next month in Shanghai. More than two dozen large US companies have rented a space there, although the US embassy in Beijing says there are no plans for the high-level promotion of the United States government.
In private, US officials UU They say that the fair emphasizes Chinese coercive practices. They allege that Chinese officials have warned executives of several large companies that their companies could suffer if they do not participate in the event. A spokesman for the Chinese embassy in Washington rejected the suit as an "unfounded accusation."
-James T. Areddy in Shanghai contributed to this article.
Write to Bob Davis in bob.davis@wsj.com and Lingling Wei in lingling.wei@wsj.com
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