Agriculture orders and intellectual property ‘still big barriers to US-China trade deal’

The “phase one” trade deal between China and the United States faces a number of barriers, including disagreements over the amount of US agricultural products China has to buy and intellectual property protection, according to Chinese observers.

The assessment came after a “constructive” phone call between Chinese Vice-Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin, over the weekend.

However, neither side used language such as making “substantial progress” or “reaching consensus” in their evaluations of the conversation – something they have done after previous calls.

“Beijing and Washington have absolutely no consensus on a wide range of issues, such as how many US agricultural products China shall buy, whether to revise China’s domestic law to protect intellectual property as requested by the US, and to what extent China can open up its financial industry to please both countries,” said Shi Yinhong, a prominent international relations specialist at Renmin University in Beijing.

“So there is still a long way for Beijing and Washington [to go] to establish a sustainable trade deal that has a solid substance.”

The US and China have already held 13 rounds of talks, the latest of which was held on October 11 in Washington, where US President Donald Trump met the Chinese negotiation team at the White House.

Earlier this month, China’s Ministry of Commerce said the two sides had agreed to remove additional tariffs in phases once their leaders had signed an interim deal.

But a day later, Trump denied the claim, saying he had not agreed to roll back US tariffs as China wanted.

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The US imposed the first tariffs on Chinese goods in March 2018 as part of a broader measure and then introduced the first levies specifically targeting Chinese goods in July that year.

Since then, Washington and Beijing have experienced multiple cycles of escalation and de-escalation.

Under Trump, the US has imposed a 25 per cent tariff on US$250 billion worth of Chinese imports and a 15 per cent duty on a further US$112 billion.

A new 15 per cent tariff on US$156 billion worth of Chinese products is set to take effect on December 15. China has hit back by targeting about US$120 billion in US goods, focusing on farm products.

Chinese analysts are not optimistic that the two countries can strike a meaningful trade deal any time soon.

Trump now insists that China must agree to buy US$50 billion worth of American agricultural goods as a condition of a deal – a figure Beijing has never confirmed.

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A Bloomberg report, citing people familiar with the negotiation, said Chinese officials were willing to buy more US agricultural products as part of the “phase one” trade deal, but it was not likely to reach the US$40 billion to US$50 billion touted by Trump.

Liu Weidong, a US affairs specialist from the Chinese Academy of Social Sciences, said China and the US had different approaches, which hindered the negotiation process.

“China wants the US to remove the tariffs in the first place to move forward the negotiations, while the US wants China to solve issues like intellectual property protection as a precondition for lowering the tariffs,” Liu said.

“And whenever China appears to make some concessions, the US then adds some new demands, which is unacceptable to Beijing,” said Liu, adding both countries needed to take a pragmatic approach.

But Shi said the US might only be willing to end the trade war if it suffered the effects of a global economic slowdown.

“There is only one possibility that the US and China can strike a deal: i.e. the US economy is dragged down by a deteriorating world economy. Otherwise, it will take a long time for the two countries to establish anything significant,” Shi said.