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TWN
Info Service on WTO and Trade Issues (Oct25/18) Geneva, 27 Oct (D. Ravi Kanth) — Top trade negotiators from China and the United States struck a positive tone on their frayed bilateral trade relations in Kuala Lumpur, Malaysia on 26 October, setting the stage for a meeting between their leaders in South Korea later this week. “I think we have a very successful framework for the leaders to discuss on Thursday [30 October],” US Treasury Secretary Scott Bessent said after two days of trade negotiations in the Malaysian capital. This came after he had recently made some rather disparaging remarks about China’s Vice Trade Minister, Ambassador Li Chenggang. In sharp contrast, China’s top negotiator, Vice Premier He Lifeng, stated unambiguously that the two sides “reached basic consensuses on arrangements to address respective trade concerns after two days of talks here.” According to a report in China’s Global Times, the Vice Premier said that the essence of China-US economic and trade relations is mutual benefit and win-win results, and that the two countries gain from cooperation and lose from confrontation. While the US side was led by the Treasury Secretary along with the US Trade Representative, Ambassador Jamieson Greer, China was represented by Vice Premier He along with Vice Trade Minister Ambassador Li Chenggang, who is known to be a tough negotiator. According to the Chinese version of the talks, the two sides had candid, in-depth, and constructive exchanges on important trade and economic issues of mutual concern. These included US Section 301 measures on China’s maritime, logistics, and shipbuilding sectors; the extension of the suspension of reciprocal tariffs; the fentanyl-related tariff and law enforcement cooperation; trade in agricultural products; and export controls. To recall, the US is on the verge of imposing allegedly unilateral port fees and WTO-inconsistent Section 301 measures on China’s maritime and shipbuilding sectors. China has severely opposed the reciprocal tariffs, plus a fentanyl-related tariff amounting to over 50% on Chinese goods entering the American market. On the issue of export sanctions -imposed by the US on flows of advanced software and aircraft engines, and by China on critical raw minerals – the two sides agreed to work out specific details and follow their respective domestic approval processes. The Chinese Vice Premier noted that maintaining the stable development of China-US trade relations serves the shared interests of both countries and peoples and meets the expectations of the international community, according to the Global Times. Commenting on continued economic and trade differences and frictions, Vice Premier He said that the two sides should uphold the principles of mutual respect, peaceful coexistence, and win-win cooperation, conduct dialogue and consultation on an equal footing, and find ways to properly address each other’s concerns. “Safeguarding the hard-won achievements in China-US economic and trade consultations requires joint efforts from both sides,” He said. According to the Global Times, the Chinese Vice Premier urged “the US side to work with China in the same direction, implement the important consensuses reached between the two heads of state during their phone conversations as well as the gains of bilateral trade talks held this year, further build mutual trust, manage differences, expand mutually beneficial cooperation, and promote China-US economic and trade relations to a higher level.” Both sides agreed that, under the strategic guidance of the two heads of state, they will make full use of the China-US economic and trade consultation mechanism, maintain close communication on respective concerns, and promote the healthy, stable, and sustainable development of economic and trade relations to benefit the two peoples and contribute to global prosperity. “The US has been tough in conveying its position, whereas China has been firm in defending its own interests and rights,” said Li, a top aide to Vice Premier He Lifeng. Asked whether the US and China would extend a trade truce set to expire on 10 November, during which both countries agreed to lower tariffs, Treasury Secretary Bessent said, “Coming out of this meeting, I would say yes, but that is at the end of the day President Trump’s decision.” Li, the senior Chinese negotiator, said that both sides will now go through internal approval processes for implementing their preliminary consensus. He didn’t offer any specifics from the talks. President Trump arrived in Kuala Lumpur on 26 October to participate in the ASEAN Summit, his first stop on a trip that includes Japan and South Korea, where he is expected to meet Chinese President Xi Jinping. President Trump, speaking aboard Air Force One en route to Malaysia, said he hoped to leave the Xi meeting with “a complete deal,” saying, “We have a really good chance of making a really comprehensive deal,” the Wall Street Journal (WSJ) reported. According to the WSJ report, the US president said that he would press China to resume purchases of US soybeans, crack down on Chinese companies exporting chemicals used to make fentanyl, and ease controls on rare earths. China this year has pulled back on its purchases of US soybeans, badly squeezing American farmers, a core constituency of President Trump. Still unanswered from the latest trade talks are whether the US will follow through on its threat of slapping a new 100% tariff on Chinese goods on 1 November and whether the US will roll back its restrictions on exporting advanced technology to China. The meetings in Malaysia were the fifth high-level talks between the two countries this year, after meetings in Geneva, Stockholm, London, and Madrid. These talks are part of a simmering trade war primarily launched by a set of allegedly unilateral tariff measures imposed by the Trump administration over the last six months, said people familiar with the development. As the squabbles seemingly peaked last month, Washington expanded a trade blacklist targeting Chinese tech companies, while Beijing earlier this month tightened controls on exports of rare earths. The new rare-earth measures imposed by China shocked and angered Washington. Beijing’s introduction of rare-earth export controls earlier this year had led to significant production disruptions for US carmakers and other companies. The Trump administration expects China to increase exports of rare-earth magnets as a condition for the US lowering its tariffs. Before the trade talks in Malaysia, which were held on the 92nd floor of Kuala Lumpur’s Merdeka 118 skyscraper, both sides made moves to build up leverage. The US opened a new investigation that could set the stage for potential tariff increases, looking into how the Chinese government has upheld its end of the so-called Phase One trade deal signed during President Trump’s first term, in which China pledged to greatly increase its purchases of American goods. China said it has fulfilled its obligations under that agreement. In response to proposed US fees on Chinese ships calling at American ports, Beijing said it would impose a special fee on US vessels docking in China and sanctioned US subsidiaries of a South Korean shipbuilder. Last month, both sides reached a framework deal on TikTok, paving the way for an agreement that would allow the Chinese-owned video-sharing app to operate in America. 10% TARIFF ON CANADA Meanwhile, in a separate development, President Trump said he is punishing Canada with an additional 10% tariff due to an issue involving the Canadian province of Ontario, which exposed the negative effects of tariffs in an advert that featured excerpts of an address by former US President Ronald Reagan in 1987 who had said that tariffs would hurt Americans. In a post on his social media website Truth Social on 26 October, President Trump claimed that “Canada was caught, red handed, putting up a fraudulent advertisement on Ronald Reagan’s Speech on Tariffs.” Continuing his criticism of Canada, President Trump said, “the Reagan Foundation said that they, “created an ad campaign using selective audio and video of President Ronald Reagan. The ad misrepresents the Presidential Radio Address,” and “did not seek nor receive permission to use and edit the remarks. The Ronald Reagan Presidential Foundation and Institute is reviewing its legal options in this matter”.” President Trump declared that “the sole purpose of this FRAUD was Canada’s hope that the United States Supreme Court will come to their “rescue” on Tariffs that they have used for years to hurt the United States.” “Now the United States is able to defend itself against high and overbearing Canadian Tariffs (and those from the rest of the World as well!),” President Trump wrote, adding that “Ronald Reagan LOVED Tariffs for purposes of National Security and the Economy, but Canada said he didn’t!” President Trump said: “Their (Canadian) Advertisement was to be taken down, IMMEDIATELY, but they let it run last night during the World Series, knowing that it was a FRAUD. Because of their serious misrepresentation of the facts, and hostile act, I am increasing the Tariff on Canada by 10% over and above what they are paying now.” People familiar with the development said that never in the eighty years of the multilateral trading system has the president of the world’s largest economy seemed unstoppable in his litany of allegedly unilateral tariff-related actions that are inconsistent with the established global trade rules. +
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