Another Hurdle in U.S.-China Trade Talks: Where to Seal the Deal -- Update

Date : 11/08/2019 @ 4:49PM
Source : Dow Jones News

Another Hurdle in U.S.-China Trade Talks: Where to Seal the Deal -- Update

By William Mauldin 

WASHINGTON -- The U.S. and China are grappling with a dual challenge on trade: wrapping up an interim deal, and solving the logistical puzzle of getting President Trump and Chinese President Xi Jinping in the same place to sign it.

Messrs. Trump and Xi were widely expected to sign the "phase one" trade agreement at the Asia-Pacific Economic Cooperation summit in Chile Nov. 16-17, but massive street protests there led the Chilean government to cancel the event.

That removed pressure on the U.S. and China to forge a deal by next week, allowing more time for negotiations and likely pushing any signing ceremony until December or later.

"These types of meetings can't be arranged overnight," said Wendy Cutler, a senior trade negotiator in the Obama administration.

Further complicating the picture, she said, neither side would want to lose its negotiating leverage by agreeing to a signing location before they have come to terms on the deal itself.

Nonetheless, discussions have begun on a signing location.

A White House official said the administration has kicked around more than a dozen possible sites to host the signing. But officials cautioned that a location won't be announced until the deal is agreed to by both sides.

Mr. Trump told reporters Friday that he hoped to sign the agreement in the U.S., preferably in Iowa or somewhere else in "farm country."

Iowa is a politically important swing state where farmers have suffered due to a drop in Chinese purchases of U.S. farm goods, in retaliation to his tariffs on Chinese imports.

While Mr. Xi has a prior connection to Iowa, former officials say the U.S. would likely have to make further concessions to China at the negotiating table to "pay" for a U.S. signing ceremony that benefits Mr. Trump politically.

"If they think Trump wants it in Iowa, that's a bargaining chip, and they'll get something for that," said Bill Reinsch, a former trade official currently at the Center for Strategic and International Studies, a think tank in Washington.

Mr. Xi is already planning to travel to Greece for a state visit Sunday, followed by a trip to Brazil to attend a summit of emerging-market economies that begins Nov. 13.

Mr. Trump is set to travel to London in early December for a summit of the North Atlantic Treaty Organization, which doesn't include China, although he could potentially meet Mr. Xi before or afterwards.

One idea floated by U.S. Secretary of State Mike Pompeo is holding an APEC summit in the U.S. in January, Malaysian Foreign Minister Saifuddin Abdullah told reporters there Thursday, according to wire reports -- possibly providing another venue for a Trump-Xi summit.

Many Republican lawmakers are eager for the Trump administration to lock in phase one of the deal with China, since that could help restore farm purchases, as well as a rollback in tariffs imposed on Sept. 1 that have hurt retailers.

"Who cares where it's signed?" said Sen. Chuck Grassley, the Iowa Republican who chairs the Senate Finance Committee, told reporters. "All we care is that it's signed."

The phase-one deal now being negotiated revolves around an agreement by the U.S. to roll back tariffs on Chinese imports in return for commitments by Beijing to purchase more U.S. farm products, agree to new rules to prevent currency manipulation and to open its financial sector to foreign firms.

U.S. trade representative Robert Lighthizer, who is leading the talks on the U.S. side, has backed an enforcement system that would allow tariffs to "snap back" on Chinese imports if Beijing doesn't live up to its side of the deal. His office declined to comment.

Still, there are divisions within the Trump administration over what the phase-one agreement should look like. The two countries were close to reaching a deal this spring, but then talks fell apart.

Both sides are now working toward a limited deal, pushing thornier issues down the road, but there is no certainty that any pact is imminent.

"We're in that most dangerous of situations, where each side feels that the other is in a weaker position," said Mr. Reinsch.

--Andrew Restuccia contributed to this article.

Write to William Mauldin at william.mauldin@wsj.com

 

(END) Dow Jones Newswires

November 08, 2019 11:34 ET (16:34 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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