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https://scmp.com/news/china/diplomacy/article/3026686/china-grants-tariff-exemptions-16-types-us-goods-ahead-trade
China/ Diplomacy

China grants tariff exemptions to 16 types of US goods ahead of trade war talks

  • Waiver will take effect next week and remain in place for one year, Customs Tariff Commission says
  • Latest round of negotiations set to take place in Washington next month
China says it will exempt 16 types of US products from its latest round of tariffs. Photo: AFP

China on Wednesday unveiled a list of 16 types of products that will be exempt from the first round of additional tariffs on US imports as the two sides prepare for their latest trade talks.

The exemption will take effect on Tuesday and remain in place until September 16, 2020, the Customs Tariff Commission of the State Council said in a statement.

A number of medicines and insecticides are included on the list, while some other products will be eligible for refunds on tariffs already paid, it said.

The exemptions list will include a number of medicines and insecticides. Photo: Reuters
The exemptions list will include a number of medicines and insecticides. Photo: Reuters

Beijing announced the exemption plan in May and invited interested parties to apply to have certain products added to the list. A second round of applications started last week.

The commission said it “will continue to conduct the work of tariff exemption on US goods and will announce follow-up waiver lists at appropriate times”.

The statement came as top trade negotiators from China and the United States prepare to meet in Washington next month in their latest attempt to resolve their trade war. Working level preparations for the meeting are currently under way.

China is expected to agree to buy more American agricultural products, a source familiar with the situation said.

Washington and Beijing have been engaged in a tit-for-tat tariff dispute since July last year after the world’s two largest economies failed to resolve Washington’s concerns about on alleged China’s intellectual property theft and trade deficit.

In the latest escalation, the US will raise the tariffs on US$250 billion worth of Chinese products to 30 per cent from 25 per cent. The increase will come into effect on October 1, the day on which China will celebrate the 70th anniversary of the founding of the People’s Republic.

Beijing has repeatedly voiced its opposition to further tariffs but has also pledged to retaliate for any such action by the US.

In earlier talks, China insisted that a deal would be possible only if the US committed to removing the duties. Washington, meanwhile, has said the tariffs must remain in place, at least in part, as part of enforcement mechanism to ensure Beijing keeps its word on addressing its concerns.

Beijing has repeatedly voiced its opposition to further tariffs. Photo: AFP
Beijing has repeatedly voiced its opposition to further tariffs. Photo: AFP

The trade war has been damaging to both countries’ economies and hurt the sentiment of US companies operating in China.

The American Chamber of Commerce in Shanghai said in a survey released on Wednesday that its members were less optimistic about future revenue growth and were redirecting investment away from China, citing the trade tensions and tariffs.

“If the US continues to use tariffs as the primary tool for achieving its trade and investment aims, we risk not only US jobs and company profits, but also giving up market share in China to European and other international competitors. That market share will be hard to win back,” Ker Bibbs, the chamber’s president, said in a press release.

Despite the planned talks, expectations of a resolution to the dispute remain low as the two sides remain far apart on key issues. Beijing is also wary of US President Donald Trump’s flip-flopping on American foreign policy.

Iris Pang, a Greater China economist at ING in Hong Kong, said in a research note that there was probably more than one reason for Beijing’s announcement of the waiver list.

“The exemptions could be seen as a gesture of sincerity towards the US ahead of negotiations in October, but they are probably more a means of supporting the economy,” she said.

The US in July announced similar exemptions on 110 products imported from China, including medical equipment.

“There are still many uncertainties in the coming trade talks. An exemption list of just 16 items will not change China’s stance. We believe that China will stand very firm in the negotiations, which will be similar to the last round of talks,” Pang said.

“Our house view is that the two countries are unlikely to reach a deal this year.”