US-China 'phase one' trade deal may not be inked this year

WASHINGTON: Completion of a “phase one” US-China trade deal could slide into next year, trade experts and people close to the White House said, as Beijing presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.

An initial trade deal could take as long as five weeks to sign, US President Donald Trump and Treasury Secretary Steven Mnuchin said here month.

Just over five weeks later, a deal is still elusive, and negotiations may be getting more complicated, trade experts and people briefed on the talks told Reuters this week.

Asked Wednesday about the status of the China deal, Trump told reporters in Texas “I don’t think they’re stepping up to the level that I want.”

Trump and US Trade Representative Robert Lighthizer recognize that rolling back tariffs for a deal that fails to address core intellectual property and technology transfer issues will not be seen as a good deal for the United States, a person briefed on the matter said.

In a dinner speech in Beijing on Wednesday, Vice Premier Liu He said he was “cautiously optimistic” on a phase one deal, Bloomberg News said, citing people who attended the event ahead of a forum organized by Bloomberg LP.

Liu, China’s chief negotiator at the Sino-U.S. trade talks, separately told one of the attendees that he was “confused” about the U.S. demands, but was confident the first phase of a deal could be completed nevertheless, Bloomberg added.

Officials from Beijing had suggested that Chinese President Xi Jinping and Trump might sign a deal in early December.

Some experts said the next date to watch was Dec. 15, when tariffs on about $156 billion in Chinese goods are set to take effect, including holiday gift items such as electronics and Christmas decorations.

“If talks are really going well, that hike will be suspended,” said Christian Whiton, a senior fellow for strategy and trade at the Center for the National Interest, and a former Trump and George W. Bush administration adviser.

“If not, the US will implement them and that will throw the game into next year.”

The U.S. Senate passed a bill on Tuesday night condemning the crackdown and pledging support for Hong Kong, which was immediately criticized by Beijing.

Read more: Trump says likely won’t sign China trade deal until he meets with Xi

“The violent crackdown against protesters in Hong Kong, which Beijing is directing, decreases the odds of a deal,” Whiton said. “Is Xi really going to be invited for a grip-and-grin with the president as his cops are beating students in Hong Kong?”

Negotiations also are complicated by conflicts within the White House about the best approach to China, and by the fact that Trump could veto any agreed deal at the last minute.

The flare-up in tensions between Washington and Beijing helped knock global stock markets from 22-month highs reached in recent weeks when some sort of resolution on the trade war appeared likely.

Some China and trade experts briefed on the talks told Reuters they were still optimistic a deal might come together in the coming weeks, and Trump said on Wednesday his team continues to talk with China.