Obstacles remain in securing trade peace after US-China talks

  • Negotiators went the extra mile to avoid failure and, although the same issues remain, there is sharper focus on what needs to be done – but verification may yet prove a stumbling block
PUBLISHED : Friday, 11 January, 2019, 10:12pm
UPDATED : Saturday, 12 January, 2019, 3:26am

Chinese and American negotiators had to go the extra mile to avoid failure in their latest talks to end the trade war. Otherwise the differences between them were too many and too wide and they have failed to narrow them too often.

The relatively low vice-ministerial level of the delegations did not hold out much hope. But halfway through a 90-day truce struck by presidents Xi Jinping and Donald Trump before the United States imposes more threatened tariffs, the need to at least forge a basis for progress was paramount.

On that test the talks can be counted a success. An early indication was that the scheduled two days of talks became three. This reflected sincerity in seeking a result and showed discussion had gone into detailed issues.

Even before that, the surprise appearance at the start by China’s top trade negotiator Liu He sent a clear message: the Chinese side was taking the meeting very seriously ahead of his expected visit to the US later this month for more substantive talks.

The issues between the two sides remain the same, but this week’s talks have sharpened the focus. The joint statement issued afterwards showed both sides felt they had achieved progress.

US negotiators pursued a number of grievances that come under the heading of structural economic problems, from forced technology transfer to intellectual property protection to non-tariff barriers to cyber intrusion and theft of trade secrets.

China’s Ministry of Commerce said the talks had laid the foundations for the resolution of disputes.

China’s vice-premier Liu He ‘likely’ to visit Washington at end of January

The American side was quick to emphasise the importance of the next step – how to verify the fulfilment of any commitments made by the Chinese.

A positive reading, however, is that the Americans were satisfied with Beijing’s promises, subject to the concern about how to verify and enforce delivery of them.

That said, the creation of an effective framework for verification and enforcement may prove a stumbling block to ending the trade war while the truce still lasts.

Reminders of that were to be found in a push from US negotiators for enforcement of earlier agreements, and insistence by the ministry that both countries, and not just China, would be responsible for an enforcement framework for China’s undertakings.

The road ahead to ending the trade war and levelling the playing field for American companies in practice as well as on paper remains fraught with obstacles.

Trade war splits Southeast Asia, belt and road fears unite it: study

Positive political factors in terms of reaching a deal both sides can live with are that China needs to safeguard its economic growth from the ravages of trade conflict, and Trump needs a quick political win on trade to show his core supporters, amid bitter strife over his domestic policies.

Another is the recovery of volatile investor sentiment, though it can change quickly. Let’s hope this is not wishful thinking. The world needs a circuit breaker to US-China trade tension, if not enduring peace.