WASHINGTON – Treasury Secretary Steven Mnuchin said Saturday that he thought the US and China were approaching the final phase of trade negotiations, getting close to what he said was the greater change in economic relations between countries for 40 years.
Mnuchin's optimism comes as the world's two largest economies strive to end a protracted trade dispute that has resulted in damaging tariffs and corporate uncertainty and has weighed on the global economy.
"We hope we will approach the last round of outstanding issues," he told reporters on the sidelines of the International Monetary Fund and World Bank Spring Meetings.
Mr Mnuchin reiterated that he claimed that the main obstacle to a trade agreement – how to apply the agreement – is almost solved. The United States has pushed China to accept a mechanism that would allow Washington to impose tariffs on Chinese products if Beijing retracted some parts of the deal.
On Saturday, Mnuchin said both the US and China would have the power to enforce the agreed commitments, which would indicate Beijing's ability to also exercise control in the future.
"We have already agreed that there was an important component in the fact that there would be a real law enforcement on both sides," he said, "including an office of law enforcement," he said. detailed execution with important resources on both sides. "
At a congressional hearing in February, Robert E. Lighthizer, chief trade negotiator for President Trump, described a complex enforcement mechanism under discussion that aimed to ensure that China kept its promises.
Mr. Lighthizer said at the time that China had agreed to meet regularly at the levels of the director of the office, the deputy minister and the minister, which would allow the United States to keep an eye on the behavior of China and corporate complaints about unfair trade practices. If China did not keep its promises, the United States would respond "proportionally but unilaterally". This would imply that the United States would respond with tariffs.
The US authorities also asked China to agree not to retaliate against the United States when it re-imposed tariffs on Chinese products. China has been reluctant to accept a unilateral enforcement mechanism, viewing it as an attack on its sovereignty and giving Washington too much power over its economy.
"If the complaints are real, we may have to use the tariffs to process them and we ask the Chinese not to retaliate," said Larry Kudlow, director of the National Economic Council, at the Fox Business Network in March at Discussion on implementation. of an agreement.
People closely following the talks have warned that law enforcement is still an obstacle that remains unresolved because China and the United States have not agreed on the details of the sanctions.
"The problem of the so-called enforcement concerns the search for a mechanism to sanction violations of the agreement," said Michael Pillsbury, China specialist at the Hudson Institute, who advises Trump administration. "It has not been done yet."
On Saturday, Mr Mnuchin did not want to clarify whether the US and China had agreed on an enforcement mechanism that would only allow Washington to respond by tariffs for violating the agreement.
"I want to be cautious in answering this question because I do not want to go into the details of the negotiations and more specifically about tariffs," he said.
But Mr Mnuchin said that he expected the application of the trade pact to be reciprocal.
"The United States has made some commitments in this agreement and China is making commitments, and I would expect the agreement on implementation to work both ways," he said. did he declare. "We expect to live up to our commitments and if we do not do it, there should be some repercussions, and in the same way in the other way."
Mr. Mnuchin would not specify the commitments made by the United States. Trump urged China to open up its economy and put an end to practices that it believes are putting American companies at a disadvantage.
The agreement under discussion would force China to end its long-standing practice of requiring US companies to hand over valuable technology as a precondition for doing business in that country, opening up areas of the economy. Chinese economy more freely. The two sides discussed China's purchase of more than $ 1 trillion worth of goods over the next few years to narrow the trade gap between the two countries.
To bring China to the negotiating table, Mr. Trump has imposed tariffs on Chinese goods worth $ 250 billion. This sanction began to weigh on the Chinese economy, and Beijing negotiators demanded that at least some of the tariffs be removed as a precondition for any final agreement. It is unknown how much and when these rates will be lifted.
The Treasury Secretary said that there were still provisions to be completed and that an agreement was not yet certain.
Representatives from the United States and China communicate regularly by phone, said Mnuchin, and they determine whether additional face-to-face meetings are needed.