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'Path to the Bigger Deal'

US Chamber Hopes Trade-Talks Progress Would Sway Trump to ‘Freeze’ Oct. 15 Tariff Hike

The top global-relations point man at the U.S. Chamber of Commerce thinks it’s possible U.S. and Chinese negotiators can reach a currency-valuation deal this week that would persuade the Trump administration to abandon hiking three rounds of tariffs to 30 percent Oct. 15, he told reporters Thursday. “We would be encouraged by that news, and we’re hopeful that will come out of the meetings this week,” said Myron Brilliant, executive vice president and head-international affairs.

Two days of U.S.-China talks began Thursday in Washington toward the ultimate goal of reaching what Brilliant called a “comprehensive, high-standard and enforceable” trade agreement. Brilliant hopes “that enough confidence comes out of this week” to convince the administration to “freeze” the Oct. 15 tariff hike, he said. He met with the U.S. and Chinese delegations this week, he said.

Brilliant hopes the administration would even “contemplate going further” by suspending the List 4A tariffs that took effect Sept. 1 and scrapping the List 4B duties before they take effect Dec. 15, he said. “But that’s going to depend on what package is put together by the Chinese side,” and “what additional offers they make” to resolve disagreements with the U.S., he said. “That’s the aspiration we have. Whether they get there or not, we’ll see.” The White House didn’t comment.

The Chamber doesn’t regard currency as “an issue that should dominate the trade talks,” said Brilliant. “There are bigger issues in our mind that have to be addressed in these trade negotiations.” If the two sides can “work through their differences” on currency, it can “yield some progress in the overall tenor of the relationship,” he said.

If the U.S. and China have a realistic chance of reaching a trade deal before the 2020 elections, “first we need the confidence on both sides that we can get there,” said Brilliant. “That’s what this week’s about.”

The U.S. and Chinese teams are “trying to find a path to the bigger deal by making progress in market access,” intellectual property protection and “other critical areas,” said Brilliant. That President Donald Trump tweeted Thursday he'll meet Friday at the White House with Liu He, China’s vice premier and lead negotiator, is “a sign that the two sides are working hard on making progress this week,” Brilliant said.

It’s possible Trump and Chinese President Xi Jinping could meet at the Asia-Pacific Economic Cooperation conference next month in Santiago, Chile, if the two sides can first reach a “framework understanding, getting back to where we were late April, early May,” before the talks broke down, said Brilliant. Though a 150-page draft on the table then still had “gaps between the two sides,” at least it was “the foundation of an agreement,” he said. “Since then, we really haven’t had the two sides working off that text.”

There remains “a lot of work to be done” in reaching agreement on terms that would curb China’s allegedly bad behavior in subsidies, market-access barriers, forced technology transfer, IP theft and digital trade, said Brilliant. He personally raised those issues when he met Wednesday for more than an hour with Liu and the rest of the Chinese delegation, he said. “They understand these are big issues not just for the Trump administration, but for the American business community.”

The Chamber wants “punitive tariffs eliminated as part of any final agreement,” said Brilliant. “Along the way, we need to see tariffs rolled back.” The “tit-for-tat punitive actions” from both sides have disrupted “global trade supply chains,” and raised business “uncertainty” that has hampered investment and hurt the financial markets, he said. “From our standpoint, both sides have been losing, and so has the global economy.”

The Chinese “understand” that “waiting out” Trump’s term for a more favorable trade deal under a possible Democratic administration in 2021 “is not an option,” said Brilliant. “This is a bipartisan issue. Both Democrats and Republicans share a consensus that China has to address the unfair trade practices.”

A U.S. “consensus exists” about the “need for progress” in the trade relationship with China, “and that China has areas that they need to address,” said Brilliant. The Chinese delegation came to Washington “with the intention of making progress this week,” he said. “There’s hope here that some progress will be made,” though “we won’t get the big agreement this week,” he said. "I'm not here to suggest we're going to have a grand slam in the U.S.-China relationship this week, but we are going to make progress," he said, referencing the Washington Nationals' victory Wednesday night over the Los Angeles Dodgers.