A Chinese trade delegation led by Vice Premier Liu He is in Washington, D.C., and tariffs and enforcement are expected to be major topics of this week’s meetings.
U.S.-China trade talks have progressed to a point where the two countries “more likely than not” will reach a deal, with about 90 percent of talks completed, yet the final 10 percent is the hardest part to get through, U.S. Chamber of Commerce head of international affairs Myron Brilliant said during a press briefing Tuesday.
“It’s the trickiest part because it requires some trade-offs by both sides,” Brilliant said.
Both the U.S. and China have been “pretty clear” they would like to reach a deal this month, but that will depend on whether officials can handle outstanding key issues, such as agreeing to a monitoring/enforcement mechanism as well as a resolution on U.S. Section 301 tariffs, Brilliant said.
“There are going to be dates that China has to comply to, in terms of implementing some of their obligations,” he said. “Are those dates going to be trigger mechanisms for when some of the tariffs would roll off? Or will some effort be made to reduce the tariffs from the outset? That’s still being negotiated.”
Brilliant added that the amount of any tariffs lifted also will depend on the comprehensiveness of any final deal.
President Donald Trump last month said he plans to leave U.S. tariffs in place on China for a time after any trade deal is reached, as part of enforcement of any agreement.
The Office of the U.S. Trade Representative didn’t respond to a request for comment on the timing or general status of negotiations.
It is expected that both tariffs and the monitoring/enforcement mechanism will be discussed during meetings in Washington, D.C., this week between U.S. trade officials and a Chinese trade delegation led by Chinese Vice Premier Liu He, Brilliant said.
In the context of any enforcement mechanism, there have been bilateral discussions about the U.S. having the right to unilateral retaliation — without China taking corresponding action — if China doesn’t meet its obligations, Brilliant said.
China is less likely to agree to any such proposal without a partial or complete removal of U.S. Section 301 tariffs, he said.
The U.S. is imposing 25 percent tariffs across $50 billion worth of goods from China in annual import value and 10 percent tariffs across another $200 billion.
China has retaliated with tariffs across $110 billion worth of U.S. goods in annual value.
The Chamber wants all tariffs on both sides removed, “but it is up to the two governments to work that out,” Brilliant said.
The U.S. could pursue tariff drawdowns in several ways, such as absolving $50 billion, $100 billion or another portion of the total $250 billion at the outset of any trade deal or by reducing tariff rates, he said.
“You could do a lot of things to phase out these tariffs and the impact that they’re having on importers and exporters both ways,” Brilliant said.
The U.S. imposed the tariffs as it seeks several structural economic reforms by Beijing, including in the areas of intellectual property protection, technology transfer and cybersecurity.
For example, one of the U.S. negotiating team’s specific asks is for China to implement a more detailed definition of the term “public interest” in its laws, including its cybersecurity law, said Jeremie Waterman, president of the Chamber’s China Center, during the press briefing.
“The scope of the cybersecurity law has created significant uncertainty in the business environment in China,” he said. “So I think that certainty around that definition and narrowing that definition is something that seems to be a priority for the U.S. negotiating team, and that’s encouraging.”
The U.S. also is requesting that China ensure that digital data flow across its borders, an area in which China has made “perhaps a step forward” during negotiations, but hasn’t given all the assurances sought by the Chamber, Brilliant said.
“A deal should go forward that is comprehensive, sustaining and enduring. That’s what we’re looking for,” he said. “We have every expectation that the two governments are looking for a mechanism that is fair and effective for enforcement of this deal. But even if we were to get a deal tomorrow or the next day, the big question is how does this deal then get implemented?”
Brilliant continued, “The deal itself will not handle all the challenges in the U.S.-China relationship, but it could put the relationship on a more positive trajectory, and most importantly, it will create more certainty in the economic relationship than there is today.”