WASHINGTON: US President Donald Trump said on Monday (Feb 25) he expects to hold a “signing summit” with China’s President Xi Jinping to seal a trade deal, since as discussions are in the “advanced stages.”
The comments cheered global stock markets, since they confirmed the dispute will not ratchet up immediately, averting an even bigger impact on the global economy.
Citing progress in the four days of talks, after officials worked through the weekend, Trump on Sunday extended the Mar 1 deadline, postponing for now a sharp increase in tariffs on US$200 billion in Chinese goods.
And on Monday he said he expected negotiations to resume quickly and “we’re going to have another summit” with Xi.
“We’re going to have a signing summit, which is even better. So hopefully we can get that completed. But we’re getting very, very close,” he said at a meeting with US governors.
Trump last week he expected to meet with Xi at his Mar-a-Lago resort in Florida sometime in March.
After exchanging punitive tariffs on more than US$360 billion in total two-way trade, Trump and Xi declared a truce in December and agreed to hold off on further tariffs or retaliation for 90 days. The United States was poised to more than double the tariffs on the most recent and largest round of Chinese exports.
In a tweet posted while he was en route to Hanoi on Monday, Trump said the China deal was in “advanced stages.”
“Relationship between our two Countries is very strong. I have therefore agreed to delay US tariff hikes. Let’s see what happens?” Trump wrote.
He told the state leaders late on Sunday to expect “very big news over the next week or two.”
Officials and economists worldwide have been watching the negotiations closely as the trade war has hit company profits, raising prices for importers and cutting sales for exporters, which could erode global growth if it is not resolved.
Christine Lagarde, head of the International Monetary Fund, has called the trade dispute a “major risk” to the global economy and billionaire investor Warren Buffet said on Monday both countries would lose if they failed to resolve their differences.
TO MOU OR NOT TO MOU?
But even after four rounds of talks, progress towards achieving the more difficult parts of a deal has been unclear.
The governments announced that China has pledged to resume or increase purchases of US agricultural goods but Washington is pushing for changes to the country’s industrial strategy and enforceable protections for American technology.
Treasury Secretary Steven Mnuchin also insisted the deal will include a provision to keep Beijing from allowing its currency to weaken in order to circumvent US tariffs but economists have said the complexities and monitoring of such an agreement would be tough to get on paper.
Gregory Daco of Oxford Economics said he expected that “a handshake agreement in which China will promise to import more agricultural products, work towards a stable currency and reinforce intellectual property rights protection will be achieved in the coming weeks.”
However, he said, “we don’t foresee a significant rollback of existing tariffs, and see underlying tensions regarding China’s strategic ambitions, its industrial policy, technological transfers and ‘verification and enforcement’ mechanisms remaining in place.”
Confusion erupted in a bizarre Oval Office exchange between Trump and US Trade Representative Robert Lighthizer, an experienced trade lawyer and hardliner on China.
Asked by a reporter about the Memorandum of Understanding or MOUs due to be signed, Trump said he did not like MOUs because he wanted something more binding.
Lighthizer explained that MOUs are in fact contracts, only to be contradicted by Trump, which caused China’s Vice Premier Liu He to laugh out loud.
Bloomberg reported that Trump was angry with Lighthizer over the exchange and frustrated that he had not concluded a deal yet.
But China has fast-tracked a new investment law which will eliminate the requirement for foreign enterprises to transfer proprietary technology to domestic joint-venture partners – a key demand from Washington. It also includes other steps to level the business playing field that Western trading partners have long demanded.
China’s parliament is expected to vote on the legislation in March – barely two months after debating a first draft.