What the U.S. and China want from trade talks

- Juni 02, 2018

Commerce Secretary Wilbur Ross is in Beijing this weekend trying make progress on trade demands that the U.S. and China are making of each other.

For the United States, the focus alternates at times between narrowing the trade deficit, cracking down on China’s state backing of high-tech sectors, and protecting the intellectual property of U.S.companies.

For Beijing, the top priority is to persuade the U.S. administration to back off harsh penalties on Chinese telecommunications giant ZTE, ease threats to impose hefty tariffs on Chinese goods and reduce export restrictions.

“The gap is wide and deep” between China’s state-run economic model and the free market principles of other countries, William Zarit, chairman of the American Chamber of Commerce in China, said last month after a U.S. delegation wrapped up two days of trade talks in Beijing. “This will not be reconciled in one or two days.”


Here’s what each side wants:

U.S. demands:

Buy more U.S. goods

— Ross will try to get China to agree to long-term contracts to buy U.S. products like agricultural materials as pat of an effort to cut China‘s trade surplus with the U.S. by $200 billion by 2020.

— The White House also wants China to approve access to its market generally and specifically for U.S. agriculture as well as services and services suppliers.

Protect U.S. technology

— Washington demanded last month that Beijing end subsidies aimed at boosting high-tech sectors China wants to dominate.

— By Jan. 1, 2019, the U.S. wants China to eliminate specific policies and practices on technology transfer. The Trump administration is preparing to impose tariffs and investment restrictions over China’s practices in this area this month if it doesn‘t comply.

— Also by next year, the U.S. wants China to end practices that force U.S. companies into joint ventures, where the Trump administration says firm are forced to hand over valuable technology.

Ease up on tariffs and challenges

— The U.S. wants China to stop challenging or retaliating against U.S. agricultural products -- either through tariffs or onerous inspection and testing at the Chinese border.

— Washington is also demanding that Beijing stop targeting U.S. companies’ technology and intellectual property through cyber operations, piracy and “economic espionage.”

— The Trump administration is also calling for quarterly reviews in which both sides will assess progress toward meeting targets and reforms. If Beijing falls behind its goals, Washington wants to reserve the right to impose additional tariffs or import restrictions as punishment without having to worry about Chinese retaliation.

China’s demands:

Save ZTE

— China wants the Trump administration to reverse a penalty handed down by the Commerce Department that prohibited U.S. suppliers from doing business with Chinese telecommunications giant ZTE for seven years, a move that would effectively shut down the company.

— President Donald Trump has already said that he and Chinese President Xi Jinping are working to give the company a way back into business. Commerce officials also notified Capitol Hill last month of a potential deal, which would have ZTE pay a bigger fine, hire American compliance officers and replace the firm's current management team.

Reel in the tariff threats

— China wants the United States to abandon the penalties it has outlined as a way of combating what it sees as Beijing’s harmful intellectual property practices, including tariffs on $50 billion worth of Chinese goods.

— Beijing also wants the U.S. to ease export restrictions on high-tech goods, which the Trump administration has also threatened as a result of China’s handling of IP and valuable data.

— China also wants the U.S. to pledge not to launch in the future any new cases under what’s known as Section 301, or the trade statute the Trump administration used to justify the tariffs and export restrictions.

Grant China market-economy status

— China is using the new talks to push again for the right to be treated as a “market economy“ when applying U.S. trade laws.

— The designation, which China thinks it has deserved since December of 2016, would require the U.S. to change the way it calculates penalties if it finds China has been dumping in a way that would be more favorable for Beijing.

Don’t break your word

— China wants the two sides to agree to a provision that would bind the U.S. to a commitment not to undertake any unilateral trade or investment restrictions against China.

— If the U.S. breaks that commitment, China would withdraw its promises.


 

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