Latest US-China trade talks end not with a bang but a whimper, if heard at all

Trade talks between the United States and China being held in Washington this week are likely to wrap up without any announcements, a senior US administration official said on Thursday.

Since their announcement last week, the relatively low-level negotiations between representatives of the two countries have been clouded in scepticism from pundits and government officials on both sides of the Pacific " a scepticism that has apparently proven out.

At the invitation of the US, a Chinese delegation led by the vice-minister for commerce Wang Shouwen travelled to Washington for two days of talks starting on Wednesday. The discussions were hosted on the US side by the Treasury's Undersecretary for International Affairs David Malpass.

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Previous rounds of talks had involved China's vice-premier Liu He and US cabinet-level department heads, including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross.

Speaking ahead of the talks, Derek Scissors, a China specialist at the American Enterprise Institute, was dismissive of the possibility that the talks could even lay the groundwork for future negotiations, given the junior rank of the participants and the fact that international trade is not among the Treasury's responsibilities.

US President Donald Trump and China President Xi Jinping are expected to meet later this year during the G20 summit in Argentina.

China's President Xi Jinping and US President Donald Trump, shown in Beijing in November 2017, may need to resolve the escalating trade war themselves. Photo: Tass/Abaca Press/TNS

Pessimism about this week's negotiations has even reached the Oval Office.

Trump told Reuters on Monday that he did not "anticipate much" from the meeting, and that he had "no time frame" when it came to resolving the escalating trade war.

The administration official who briefed reporters on background on Thursday insisted that the president was open to "engaging with Chinese officials on these issues", and that the US hoped China "will take seriously the concerns [we have] raised, and that that can put us on a better posture".

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But Trump administration officials did not wish "to create any expectation of any announcement coming out" of the meetings.

Meanwhile, the trade war continued its escalation on Thursday, as the US enacted punitive tariffs of 25 per cent on US$16 billion of Chinese imports, an action that was immediately mirrored by China.

China's Ministry of Commerce said on Thursday that the latest US import duties violated World Trade Organisation rules, and that China had no alternative "but to take countermeasures".

This week also saw the US Trade Representative's office hold an unprecedented six-day public hearing ahead of further tariffs on US$200 billion of Chinese goods, expected to go into effect in September. Initially proposed at 10 per cent, the duties could be raised to as much as 25 per cent, at Trump's direction.

The additional tariffs would effectively slap levies on half of all Chinese exports to the US, or roughly double what China imports from the US.

Business representatives, trade association leaders and legal experts have come out in force at the trade representative's hearing in a bid to dissuade the office from going ahead with the proposed tariffs.

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Witnesses have spoken of the potential of the punitive action to "decimate" their industries, ranging from electronics to apparel to chemicals. Echoing the testimonies of previous hearings, the USTR panel was told that further punitive action would slash profit margins for small and medium-sized businesses that rely on Chinese manufacturing, and would ultimately pass the financial burden on to end-customers, including public institutions like hospitals.

Despite resistance from industry and business, support among agricultural sector, a stronghold of Trump voters, remains solid. Presidential ratings among farmers is even on the rise in some states, despite the fact that soybean producers, many of whom rely exclusively on the Chinese market, are facing the worst of the tariff storm.

That loyalty will likely be bolstered by a US$12 billion bailout for farmers Trump approved last month.

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A deal on the North American Free Trade Agreement (Nafta), expected in the coming few days, could also leave Trump on firmer ground when it comes to maintaining his aggressive strategy towards trade with China.

Mexico and the US are expected to reach agreement on the deal by the end of this week, though Mexico's commerce minister emphasised yesterday that a final handshake on the trilateral deal would require the presence of all three parties, including Canada.

Drawing attention to a deal on Nafta, should it go ahead, will likely be a priority for the White House.

This article originally appeared on the South China Morning Post (SCMP).

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