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U.S., China End Latest Trade Talks Without Settlement

3 Jun 2018 4:23 pm
By Lingling Wei in Beijing and Bob Davis in Washington 

The U.S. and China moved closer to imposing tariffs on one another as negotiators made little progress in talks and Beijing threatened that it won't abide by a deal on farm and other products if the U.S. goes ahead with sanctions.

U.S. Commerce Secretary Wilbur Ross and Liu He, China's economic czar, led the weekend negotiations in Beijing, after several days of talks by lower level officials. Discussions centered on getting China to carry out recent promises to buy more American farm and energy products.

White House statements last week that it plans to impose tariffs on $50 billion in Chinese goods and other penalties clouded the talks, causing Chinese officials to dig in their heels, according to people with knowledge of the discussions from both sides.

"Before committing to anything, the Chinese side wants assurance that Washington won't go ahead with its tariff threats," said one of the people.

A statement released Sunday by China's official Xinhua News Agency said both sides achieved "concrete progress" in areas including agriculture and energy but details are yet to be hammered out. "If the U.S. introduces trade sanctions including tariffs," the statement added, any results from the negotiations "won't go into effect."

That means China would not only back out of any purchasing agreements with the U.S. but also retaliate for any U.S. sanctions, Chinese officials said.

Mr. Ross's delegation prepared to leave Beijing later Sunday without comment or agreement with Chinese officials on a joint statement. In comments to Mr. Liu in front of reporters earlier Sunday, Mr. Ross said "our meetings so far have been friendly and frank, and covered some useful topics about specific export items."

Beijing's tough line in the negotiations comes as some of the U.S.'s closest allies criticize the Trump administration for enacting what they see as protectionist trade policies. Finance ministers from the six non-U.S. members of the Group of Seven industrialized nations -- Canada, France, Germany, the U.K., Italy and Japan -- released a joint statement Saturday conveying their "unanimous concern and disappointment" with the U.S. decision last week to impose tariffs on steel and aluminum imported from the European Union, Canada and Mexico.

For Beijing, the outcry from U.S. allies is providing additional reasons not to cut a deal with the U.S. now, according to the people with knowledge of the discussions. It's also creating an opportunity for China to bill itself as a guardian of the global trading order and line up support from other countries. "China is willing to increase imports from all countries including the U.S., which is beneficial to the two countries and to the whole world," Xinhua's Sunday statement said.

The Trump administration's unexpected announcement this past week on the tariffs on $50 billion in Chinese products also complicated Mr. Ross's task. The tariffs on "industrially significant technology" and other penalties are meant to restrict China's access to U.S. technology and punish Beijing for what the U.S. says are unfair trade practices, and the White House said it would levy the tariffs shortly after June 15 unless there was a breakthrough in talks.

Mr. Ross hoped to secure a deal for increased Chinese purchases of U.S. soybeans, beef, poultry, natural gas and crude oil, among other agricultural and energy products -- something China agreed to in talks last month. Many of those products, however, are goods Beijing has said it will target for trade levies if the U.S. moves forward with its threatened tariffs on $50 billion in goods. The Trump administration has said it is considering tariffs on an additional $100 billion in Chinese products -- a move that Beijing has said it will meet in kind.

The renewed White House threats, in Beijing's eyes, ended a truce the two sides declared less than two weeks earlier and put Mr. Ross's mission at risk.

Adding to the uncertainty, according to people familiar with the matter, U.S. officials preparing for Mr. Ross's visit and their Chinese peers haggled over how to get Beijing to purchase more American farm and energy products.

The U.S. officials pressed their Chinese counterparts to commit to multiyear purchase agreements, thinking such pacts could be useful in prodding China to significantly lower tariffs and ease regulations and other barriers to imported goods. But Chinese officials resisted immediately implementing those changes even though they agreed to more purchases, these people said.

In the end, Mr. Ross decided to travel to Beijing to maintain a dialogue, the people said. Chinese officials took his arrival as a sign that Mr. Ross was eager for a deal. It's unclear what progress, if any, both sides made toward resolving the differences over purchases during the talks this weekend.

Other issues crucial to the U.S.-China trade relationship also remain unresolved. For example, China has resisted Washington's demands to eliminate government-backed policies promoting the adoption of advanced technologies, policies the U.S. says favor domestic companies. Drawing particular fire is an initiative, Made in China 2025, which aims to enable Chinese companies to dominate electric vehicles, aerospace, robotics and other frontiers of manufacturing.

"What will certainly not happen is Beijing changing its spots," said Derek Scissors, a China scholar at the American Enterprise Institute, a Washington think tank. "Intellectual-property theft and coercion will continue, state-owned enterprise will be subsidized and sheltered, market access will be poor, and trade and foreign investment will function as tools of Chinese industrial policy."

China has said it has made progress with protecting intellectual property and American companies willingly enter into contracts with Chinese companies to operate in China.

Write to Lingling Wei at lingling.wei@wsj.com and Bob Davis at bob.davis@wsj.com

(END) Dow Jones Newswires

June 03, 2018 12:23 ET (16:23 GMT)

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