Trump praises US-China trade talks, despite ongoing WTO case

United States President Donald Trump on Monday said efforts to end a US trade war with China were going well, as the world’s two largest economies continued to battle over trade and politics across the globe despite reaching a long-awaited truce this month.

Trump last week said he hopes that the first phase of a trade deal announced earlier in October will be signed by the middle of November.

“The deal with China’s coming along very well. They want to make a deal,” Trump told reporters before a US Cabinet meeting, stressing the toll that US tariffs have taken on the Chinese economy. “They sort of have to make a deal,” he added, “because their supply chain is going down the tubes”.

US Trade Representative Robert Lighthizer told reporters the administration still aimed to finalise a deal on the first phase of the deal in time for the Asia-Pacific Economic Cooperation meetings in Chile on November 16 and 17, but said there were still outstanding issues to resolve.

He said deputy-level meetings took place on Monday, as he and Treasury Secretary Steven Mnuchin prepare to speak with their counterparts on Friday.

But Secretary of Commerce Wilbur Ross sought to temper expectations that a deal would be completed next month, telling the Fox Business Network that timing was less important than making “the right deal”.

Meanwhile, White House economic adviser Larry Kudlow told the network that 15 percent US tariffs on many consumer goods imported from China – including  mobile phones, laptops and tablets – could be withdrawn if negotiations continue to go well.

‘Wrong legal interpretation’

Earlier this month, the administration delayed raising tariffs on another $250bn of Chinese goods to 30 percent from 25 percent.

Tit-for-tat tariffs imposed by the US and China over the past 15 months have roiled financial markets and resulted in a sharp drag on global economic growth.

Pressure is mounting from the international community for the two powers to work out their differences.

Last week, the International Monetary Fund forecast that fallout from the US-China trade war – and other trade disputes across the world – will slow global growth in 2019 to three percent, the slowest pace in a decade.

While key officials in the Trump administration are working on a trade deal with Beijing, others continue to hammer Beijing on other issues. This strategic ambivalence raises questions about how well the administration is coordinating its China policy.

Secretary of State Mike Pompeo on Monday said it was “completely inappropriate” for China to retaliate against US businesses for commenting on pro-democracy protests in Hong Kong.

Positive steps in the trade talks also did not stop China from seeking $2.4bn in retaliatory sanctions against the US for noncompliance with a World Trade Organization ruling in a case dating to the era of former US President Barack Obama.

WTO appeals judges had ruled in July that the US did not fully comply with the ruling and could face Chinese sanctions if it does not remove certain tariffs that break the trade watchdog’s rules.

The WTO’s Dispute Settlement Body effectively gave Beijing a green light to seek compensatory sanctions in mid-August. The US said at the time that it did not view the WTO findings as valid and that the judges had applied “the wrong legal interpretation in this dispute”.

The US delegation at the WTO said China remains the “serial offender” of the WTO’s subsidies agreement. But US officials in Geneva and Washington had no further comment about the case on Monday.