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China, US launch trade talks amid deep differences

Updated January 31, 2019

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This file photo shows US President Donald Trump and China's President Xi Jinping leave an event at the Great Hall of the People in Beijing, Nov. 9, 2017.— AFP/File
This file photo shows US President Donald Trump and China's President Xi Jinping leave an event at the Great Hall of the People in Beijing, Nov. 9, 2017.— AFP/File

WASHINGTON: The US and China opened a pivotal round of high-level talks on Wednesday aimed at digging out from their months-long trade war amid deep differences over Chinese practices on intellectual property and technology transfer.

Cabinet-level officials, led by Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer, gathered in the Eisenhower Executive Office Building next to the White House, with about a month to reach a deal before a March 2 US deadline to increase tariffs on Chinese goods.

The talks began two days after the US charged Chinese telecommunications company Huawei Technologies Ltd and its Chief Financial Officer Meng Wanzhou with conspiring to violate US sanctions on Iran by doing business through a subsidiary it tried to hide.

Meng was arrested in Canada on Dec 1 at the request of the US, which is seeking to have her extradited.

The talks in Washington are expected to be tense, with little indication so far that Chinese officials are willing to address core US demands to fully protect American intellectual property rights and end policies that Washington has said force US companies to transfer technology to Chinese firms.

The US complaints, along with accusations of Chinese cyber theft of US trade secrets and a systematic campaign to acquire US technology firms, were used by the Trump administration to justify punitive tariffs on $250 billion worth of Chinese imports.

Trump has threatened to raise tariffs on $200bn of goods to 25 per cent from 10pc on March 2 if an agreement cannot be reached. He has also threatened new tariffs on the remainder of Chinese goods shipped to the US. China has retaliated with tariffs of its own, but has suspended some and is allowing some purchases of US soybeans during the talks. Chinese officials deny that their policies coerce technology transfers.

They have emphasised steps already taken, including reduced automotive tariffs and a draft foreign investment law that improves access for foreign firms and promises to outlaw “administrative means to force the transfer of technology.” China is fast-tracking that new law, with the country’s largely rubber-stamping parliament likely to approve it in March.

A crucial component of any progress in the talks, according to top Trump administration officials, is agreement on a mechanism to verify and “enforce” China’s follow-through on any reform pledges that it makes. This could maintain the threat of US tariffs on Chinese goods for the long term.

Published in Dawn, January 31st, 2019