Donald Trump’s top trade negotiator said the US and China had settled on a process for enforcing a trade agreement between the countries, clearing a key hurdle in the negotiations to end their trade war.
In testimony to Congress on Wednesday, Robert Lighthizer, the US trade representative, said that Chinese officials had agreed to regular meetings among senior officials at different levels to discuss US complaints. If there was no satisfactory outcome after that, Washington could proceed with “unilateral” but “proportional” action to punish Beijing.
Mr Lighthizer’s announcement of an apparent entente on enforcement comes amid growing expectations that Mr Trump and Xi Jinping, his Chinese counterpart, are on the verge of an agreement to end the cycle of tit-for-tat tariffs that has cast a cloud over the global economy in the past year.
On Sunday Mr Trump said the US would hold off on increasing tariffs on $200bn of Chinese goods — which was set to happen on March 1 — citing “substantial progress” in the negotiations between the two countries, which have taken place over the past three months.
Speaking to the US House of Representatives’ ways and means committee, Mr Lighthizer said “real progress” was being made in the talks, and that if a deal were reached it could “help us turn the corner in our economic relationship with China”.
“Let me be clear: much still needs to be done both before an agreement is reached and, more importantly, after it is reached, if one is reached,” he added.
US officials led by Mr Lighthizer have often said that ensuring China lived up to its commitments in any deal was a critical element of the package, along with the substance of a deal, given American criticism that Beijing has often flouted previous promises to reform its economic policies.
According to the enforcement mechanism laid out by Mr Lighthizer, complaints that China was not abiding by the deal with Mr Trump would be discussed at monthly meetings at the office director level, and quarterly meetings at the vice-ministerial level, as well as semi-annual meetings at the ministerial level. After that, the US could move to reimpose tariffs on China.
Mr Lighthizer said he was “not foolish enough” to think that one deal could solve all the troubles in the economic relationship with China, however, and believed “other problems will arise”.
A possible trade deal between the US and China is not expected to be finalised until Mr Trump and Mr Xi meet again. No date has been given, but it is expected to be weeks away, not months away, according to analysts.
US officials, including Mr Lighthizer, are facing pressure to show that they have extracted real concessions from China on issues such as forced technology transfer from American companies to Chinese entities, the widespread use of industrial subsidies by Beijing and regulatory discrimination against foreign companies in China, as well as bigger Chinese purchases of US goods. Democrats on Capitol Hill in particular have warned the Trump administration not to settle for a weak deal.
“The Trump administration tariffs have been sweeping, disruptive, controversial, and painful. The administration’s promise is that its high-risk approach will yield high rewards,” said Richard Neal, the Democrat from Massachusetts who chairs the House ways and means committee. “My concern is that we are about to see the administration use the same, ineffective playbook it used in the past,” he added.
Mr Lighthizer sought to reassure lawmakers that the US was not just seeking a limited deal involving more “purchases” of American goods, and stressed that provisions on currency, to prevent competitive devaluations on the part of Beijing, would also be part of any agreement.
The trade representative had publicly clashed with Mr Trump in the Oval Office over the terminology of any agreement that would be reached with China, after the US president said he did not want it to be called a “memorandum of understanding”. But on Wednesday Mr Lighthizer dismissed suggestions of a rift with Mr Trump: “If it wasn’t for the president, I’d have no power and no inspiration.”