Phase 1: US, China try to reach preliminary trade deal next month

US Treasury Secretary Steven Mnuchin says phone conferences are being held and would travel to Beijing if necessary.

Lighthizer, Liu He and Mnuchin
US Treasury Secretary Steven Mnuchin, (right), said that he and US Trade Representative Robert Lighthizer, (left), would speak to China's Vice Premier Liu He by phone in the coming week [File: Andrew Harrer/Bloomberg]

Negotiators from the United States and China are working on nailing down a Phase 1 trade deal text for their presidents to sign in November, US Treasury Secretary Steven Mnuchin said on Wednesday, adding he was prepared to travel to Beijing for more meetings if necessary.

Mnuchin, in a wide-ranging news conference at the Treasury, said there was no invitation from Beijing for another high-level meeting with Vice Premier Liu He on the trade deal outlined last week, but deputies were holding phone conferences this week.

“As of now, there’s no invitation and there’s no plan” for a high-level meeting. “That doesn’t mean we won’t go,” he said.

Mnuchin said he and US Trade Representative Robert Lighthizer would speak with Liu next week by telephone and the three of them were likely to meet in Santiago, Chile, in advance of an expected meeting between President Donald Trump and Chinese President Xi Jinping at a November 16-17 summit of Asia-Pacific Economic Cooperation (APEC) countries.

Mnuchin said the Trump administration’s “objective” was for the agreement to be signed at the APEC summit.

The Trump administration has made no decision on how to address planned 10-percent tariffs on roughly $156bn of Chinese goods due to take effect on December 15 after opting not to proceed with a tariff rate increase slated for Tuesday.

“We have not gone to the president with any recommendation or any decision – obviously what we were all focused on was the October tariffs,” Mnuchin said. “We’ll address that as we continue to have conversations.”

The Treasury chief, who has played a central role in the US-China trade negotiations, dismissed suggestions China had not agreed with the US on the substance of the initial phase outlined by Trump last Friday.

Mnuchin said the proposed Phase 1 text would include a “quite broad” chapter on protecting US intellectual property rights in China, but only part of a chapter that aims to curb the forced transfer of US technology to Chinese firms.

Beijing has denied its laws require such transfers and says any that occur are the result of commercial transactions.

Some of the technology-transfer issues would be addressed in a second phase of negotiations, as would non-financial services, Mnuchin said, with openings of China’s financial services market addressed in the first phase. The initial phase would also include chapters on structural agricultural issues and currencies.

Mnuchin said Treasury had not determined how to address its designation of Beijing as a currency manipulator in its October currency report, which was due on Tuesday. He said the two sides had agreed on currency provisions last week, which will be reviewed “as we put out the report”.

The Treasury chief also said some conversations with the governor of China’s central bank, Yi Gang, had eased some Treasury concerns.

“I’m not prepared to go into the details of them other than to say that there were certain issues that he did get us more comfortable on, and more information,” Mnuchin added.

Source: Reuters