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 President Trump and President Xi Jinping of China which is 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.
"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."
Stagnation occurs when tensions between the two largest economies in the world are spreading from trade to national security problems. Vice President Mike Pence, in a recent speech, criticized the acquisition of sensitive technology by China and its military stance of confrontation. Mr. Pence accused Beijing of meddling in US policy, leaving the leadership of China perplexed about the scope of its growing challenges with Washington, said Craig Allen, chairman of the US and China Business Council, a group commercial of large firms in the United States.
"They are not clear that responding to commercial issues would be enough to clear the air bilaterally," Allen said.
For Beijing, making a formal offer presents a series of risks, said individuals informed by the Chinese. First, it would reveal China's 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, then-President Clinton rejected an offer by China's prime minister at the time, Zhu Rongji, which included deep concessions and a reorganization of China's 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 a similar treatment to the one initially offered.
The ambassador of China in the USA UU., Cui Tiankai, said Beijing wanted more discussions before presenting a specific offer. "People have to sit together," he 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.
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
Mr. Allen of the US and Chinese Business Council said he recently met with senior Chinese officials and urged them to submit a written proposal. He said that they were not yet ready to do so and that they were seeking assurances 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 Trump would not fall into such a trap. Chinese officials are well known for carefully preparing for meetings, while 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.
Chinese officials divided the United States' demands into 142 separate articles, which they then classified into three categories, said the 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 conceptual in 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.
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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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"Show us your list," said the White House high-ranking official, or negotiations will not take place before the G-20.
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 spaces there, although the US Embassy has UU In Beijing says there are no plans for the high-level promotion of the US government. UU
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 dismissed 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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