Washington (AFP) – Senior US officials are due to travel to Beijing to hold talks on resolving an escalating trade dispute and say they are hopeful of finding a solution but warn the issues are complex.
If they fail to agree on a course of action to protect intellectual property rights from depredation, US punitive tariffs on $50 billion in Chinese goods are set to take effect May 22 and are certain to set off a chain of retaliation that could spill over into the global economy.
“I’m always hoping but not always hopeful,” US Trade Representative Robert Lighthizer said Tuesday. “It’s a big, big challenge.”
President Donald Trump announced the punitive action against China in late March for what the administration says is rampant theft of US technology and know-how.
Lighthizer said the problems were grave since practices such as forced technology transfers and even outright theft undermine the US ability to position itself for the economy of the future.
“They are using their own law to get technology without paying for it,” he told a US-China business conference.
He is due to travel to China with Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and White House economic advisers Peter Navarro and Larry Kudlow to meet with their counterparts on Thursday and Friday.
China Wednesday welcomed the US delegation’s visit but cautioned against high expectations for the trade talks.
“It is not realistic to resolve all issues through one round of negotiations, but we believe that, as long as the US is sincere, to resolve the relevant issues, the negotiation will be a positive one,” said foreign ministry spokeswoman Hua Chunying said.
Vice Premier Liu He, the country’s top economic official, will head the Chinese side at the talks, according to state news agency Xinhua.
– ‘Most sinful’ –
US officials have highlighted Beijing’s “China 2025” industrial development plan as a source of concern — Ross called it “frightening” — since they say it is a map for dominating key high tech industries.
Lighthizer said China had already followed that path with steel and aluminum — products now subject to steep US tariffs — as well as semiconductors and “now they want to do it in all these areas, many of which will drive the economy.”
“The whole relationship has a lot of negatives,” he said, but “the most sinful is this issue of intellectual property.”
In comments earlier on Tuesday, Ross declined to say what would be sufficient to satisfy the White House but stressed it was time for action on the trade deficit, which he described as “too big, too chronic and too inspired by evil practices.”
Still, “I wouldn’t be going all the way over there if I didn’t think there was some hope,” he said in an interview with CNBC.
Economists have faulted the administration’s focus on reducing trade deficits with specific countries, since it is not a good measure of the benefits of the relationship.
But Lighthizer said Trump was right that “deficits do matter,” adding that the imbalance with China was “completely lopsided,” which made it fair to ask if their policies contributed to the increase.
The US deficit in goods with China last year was $375 billion, compared to just $83 billion in 2000, before Beijing joined the World Trade Organization.
– Trade war –
The Trump administration’s aggressive trade strategy has fueled concerns the exchange of reprisals would harm economies just starting to find firmer footing after years of sluggish growth.
China has promised to retaliate with tariffs on $50 billion in US goods, prompting Trump to boost the US threat by another $100 billion.
US manufacturers over the past two months have reported sharp increases in prices of steel and aluminum as a result of the biting tariffs also imposed in March, and the EU also has threatened retaliation against those duties if their exemption expires on June 1.
Ross downplayed the concerns about retaliation on the US economy, saying, “We are the ones in the deficit position. That means they have more to lose at the end of the day.”
Thomas Donohue, president of the US Chamber of Commerce, on Tuesday urged the administration to find a solution “without inflicting collateral damage on business and consumers.”
He called for Beijing to move “aggressively” to reform its economy but called on Washington “to work collectively… to adequately address China’s unfair trade practices.”