US-China trade deal ‘within reach if Xi Jinping and Donald Trump show courage’ at G20 summit in Osaka

A trade agreement between China and the United States is “within reach”, a senior US business representative has said, as long as Donald Trump and Xi Jinping have the “courage” to compromise. The two presidents will sit down for face-to-face talks at the G20 summit in Osaka, Japan, next week, raising hopes that trade negotiations between the two sides will get back on track. “In my view, that agreement is within reach, but it is difficult for both leaders. I hope that they both have the courage to get to the word ‘sure’ or ‘yes’. “Let them get to the word ‘yes’ – we have an agreement”, Craig Allen, president of the US-China Business Council, told a seminar at Renmin University in Beijing on Wednesday. He said that setbacks in high-stakes trade negotiations were normal and drew parallels with two companies negotiating a merger. He said the two leaders of the negotiating teams, Chinese Vice-Premier Liu He and US Trade Representative Robert Lighthizer, were like two chief executives who “have reached a merger agreement in principle … but not so detailed”. Continuing the analogy, Allen said: “They told their lawyers go and write down the agreement. When the lawyers came back with the agreement, they said ‘oh my god, that’s not what we agreed’. “This is quite normal in trade negotiations, in any negotiation. You can reach an agreement in principle, but the actual details are much more difficult,” he said. In a carefully worded speech, Allen listed the US concerns behind the lingering trade tensions and called on Beijing to address them, saying it would benefit the country in the long run. “I would argue that all of the changes discussed in the bilateral negotiations are good for China and will lead to long-term sustainable growth in China. “There is a need for continued economic reform and opening and 2019 would be a great time to do that,” Allen said. I would argue that all the changes discussed in the bilateral negotiations are good for China Craig Allen In recent weeks Chinese state media has played up the rhetoric against Washington, accusing the US of making unreasonable demands, after the trade talks collapsed in May. Allen’s speech offered a rare opportunity for the US perspective to be aired in China, though he told the audience that “I don’t mean any of these [concerns] to be criticisms, but I want you to understand why we’re having this discussion”. He said the Chinese economy, in which the state was heavily involved, was diverging from global norms and presented a challenge to the World Trade Organisation. He said the private sector had contributed a large majority to China’s innovation, economic growth and job creation, adding that introducing market principles into state-owned enterprises (SOEs) and stopping intellectual property theft and hacking would help China become an innovative society. He accepted that there was a role for a government to play in developing technology, describing the country’s policies in this field as “very effective and aggressive”. China should not have a nationalist industrial policy, nor should America Craig Allen But he said that the quota targets for home-grown technologies included in the controversial “Made in China 2025” policy violated WTO rules and that barriers to market access put foreign companies at a disadvantage in the Chinese market. “China should not have a nationalist industrial policy, nor should America, we should work together,” he said. He also said Beijing should give complete disclosure about how subsidies had been used, break down the monopolies enjoyed by SOEs, and allow greater participation by private and foreign companies. Trump-Xi G20 meeting welcomed, but trade war’s damage to linger Allen also called for an “objective” approach from both sides towards the US ban on Huawei on security grounds, saying they should keep “technology policy and national security policy separate” and not allow the latter to “dominate” trade policy. He also described China as being “unusual” because of its tight controls on information. “Foreign newspapers are not published in China. Google cannot operate in China,” Allen said. “Facebook cannot operate in China. And I think that … it makes difficult for foreigners to do business here.” Allen concluded by saying he was confident that the two sides would be able to settle their economic dispute and hoped this would provide a basis for tackling even more serious issues. “It is my hope that as we move forward with US-China relations, that we will solve the economic issues … [and] the other issues that we face, be it military or security or a thousand issues that we could talk about, will be easier to resolve.” Professor Wu Xiaoqiu, vice-president of the university, responded to Allen’s comments by saying that both the US and China should respect each other’s fundamental interests – which in China’s case was sovereignty. US sanctions over Xinjiang said ‘ready to go’ except for Treasury hold-up “No country can override China, we are all equal,” said Wu, who specialises in capital markets. But Wu said that respecting these fundamental interests would help both sides reach a solution. “No matter whether it is the subsidies to SOEs, the market access, the technology transfer, or the intellectual property protection, all can be resolved by talks,” he said. Sign up to our China at a Glance newsletter and you'll receive an exclusive 3-day G20 news package in collaboration with POLITICO (coverage from 28-30 June)