US, China launch high level trade talks amid deep differences | The Daily Star
12:00 AM, January 31, 2019 / LAST MODIFIED: 01:06 AM, January 31, 2019

US, China launch high level trade talks amid deep differences

The United States and China were set to try again on Wednesday to dig out from a damaging trade war with a new round of high-level talks aimed at bridging deep differences over China's intellectual property and technology transfer policies.

Cabinet-level officials, led by Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer, are due to begin two days of talks at 9 a.m. EST (1400 GMT) next door to the White House. They come with about a month left in a 90-day trade truce agreed in December by President Donald Trump and Chinese President Xi Jinping.

People familiar with the talks and trade experts watching them say that, so far, there has been little indication that Chinese officials are willing to address core US demands to protect American intellectual property rights and end policies that Washington says force US companies to transfer technology to Chinese firms.

The US complaints, along with accusations of Chinese cyber theft of US trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive US tariffs on $250 billion worth of Chinese imports.

Trump has threatened to raise tariffs on $200 billion of goods to 25 percent from 10 percent on March 2 if an agreement cannot be reached. He has also threatened new tariffs on the remainder of Chinese goods shipped to the United States. China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of US soybeans during the talks.

“Clearly on the structural concerns, on forced technology transfer, there remains a significant gap if not a wide chasm between the two sides,” a person familiar with the talks told Reuters.

Chinese officials deny that their policies coerce technology transfers.

They have emphasized steps already taken, including reduced automotive tariffs and a draft foreign investment law that improves access for foreign firms and promises to outlaw “administrative means to force the transfer of technology.”

China is fast-tracking that new law, with the country's largely rubber-stamp parliament likely to approve it in March. A crucial component of any progress in the talks, according to top administration officials, is agreement on a mechanism to verify and “enforce” China's follow-through on any reform pledges that it makes. This could maintain the threat of US tariffs on Chinese goods for the long term. Some business groups watching the talks were tempering expectations for a breakthrough.

With a month to go before the deadline, it was unlikely that either side would put their best offers on the table in the next two days, said Erin Ennis, senior vice president of the US-China Business Council.

“I don't think there's going to be any big outcome,” Ennis said of the talks scheduled for Wednesday and Thursday. “Hopefully they make some good progress that will set them up to be able to get to completion at the end of the 90 days.”

But the Chinese side, led by Vice Premier Liu He, would likely have to bring to the table a new offer that goes significantly beyond its previous offers to significantly increase purchases of US goods, including soybeans, energy and manufactured goods.

People familiar with the talks said manufactured goods, a key priority for the Trump administration, were among the largest components of Chinese purchase pledges aimed at significantly reducing the US trade deficit with China. But here, too, there are “no guarantees” that Beijing would follow through on these pledges, one of the people said.

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