China still hopeful of phase one trade deal with US

Shanghai’s financial district: China is hoping more trade talks can take place before the Thanksgiving holiday. (AFP)
Updated 22 November 2019

China still hopeful of phase one trade deal with US

  • American legislation over Hong Kong could pose new barrier to progress

BEIJING: China will strive to reach an initial trade agreement with the United States as both sides keep communication channels open, the Chinese commerce ministry said on Thursday, in an attempt to allay fears talks might be unraveling.

China is willing to work with the US to resolve each other’s core concerns on the basis of equality and mutual respect, and will try hard to reach a “phase one” deal, Gao Feng, spokesman at the ministry, told reporters.

“This is in line with the interests of both China and the United States, and of the world,” Gao said.

Economists warn that the prolonged trade dispute between China and the United States is escalating risks to the global economy by disrupting supply chains, discouraging investment and dampening business confidence.

Completion of a phase one deal could slide into next year, trade experts and people close to the White House told Reuters previously, as Beijing presses for more extensive tariff rollbacks and the US administration counters with heightened demands of its own.

China has invited top US trade negotiators for a new round of talks in Beijing, the Wall Street Journal reported on Thursday, adding Beijing hopes the round of talks can take place before next Thursday’s Thanksgiving holiday in the United States.

US officials have indicated they would be willing to meet but have not committed to a date, the report said, and they would be reluctant to travel for the talks unless China makes it clear it would make commitments on intellectual property protection, forced technology transfers and agricultural purchases.

Global equities retreated on Thursday due to concerns that the phase one deal would be delayed. The trade jitters sent the 10-year US Treasury yield down to near its lowest levels in three weeks. The Chinese yuan also softened against the dollar.

Officials from Beijing had suggested that Chinese President Xi Jinping and US counterpart Donald Trump might sign a deal in early December.

Some experts said the next date to watch was Dec. 15, when US tariffs on about $156 billion in Chinese goods are to take effect, including gift items such as electronics and Christmas decorations.

In a speech on Wednesday in Beijing, Chinese Vice Premier Liu He said he was “cautiously optimistic” on a phase one deal, Bloomberg News said, citing people present ahead of a forum organized by Bloomberg LP.

Liu, China’s chief negotiator at the trade talks, told one of the attendees that he was “confused” about the US demands, but was confident the first phase of a deal could be completed nevertheless.

Gao, when asked about sticking points and whether they were related to Washington’s demand for China to buy more US farm goods and the tariff rollbacks, said he did not have more information to disclose beyond the fact that both parties would continue to communicate, and “outside rumors are not accurate.”

A former Chinese commerce minister told Reuters that both sides should return to the time when the trade war first started.

“We should return to the point of origin and cancel all tariffs,” Wei Jianguo said on the sidelines of the Bloomberg forum.

Wei said he was hopeful for a phase one pact, in light of the pressure on both the US and Chinese economies as the trade war dragged on.

“Trump himself is cognizant about the needs of the (upcoming US) elections, and the US economy has also suffered great losses,” he said. “Under such circumstances, it is entirely possible to reach a phased agreement.”

A fresh row between Washington and Beijing over US legislation on Hong Kong has also threatened to undermine talks and delay a phase one deal that investors had initially hoped to be signed by now.

The US House of Representatives on Wednesday passed two bills to back protesters in Hong Kong and send a warning to China about human rights, with Trump expected to sign them into law.

The measure would require the State Department to certify at least once a year that Hong Kong retains enough autonomy to qualify for the special US trading consideration that helped it become a world financial center.

“We urge the US side to cease this activity, stop before it’s too late and take action to prevent these measures from becoming law,  and stop meddling in Hong Kong’s affairs and China’s affairs,” said Geng Shuang, spokesman at the Chinese foreign ministry.

Trump has 10 days to sign a bill passed by Congress, or use his veto.

On Thursday, the ruling Chinese Communist Party’s main newspaper, the People’s Daily, urged the US to “rein in the horse at the edge of the precipice” and stop interfering in Hong Kong matters and China’s internal affairs.

 


France ready to take Trump’s tariff threat to WTO

Updated 08 December 2019

France ready to take Trump’s tariff threat to WTO

  • Macron government will discuss a global digital tax with Washington at the OECD, says finance minister

PARIS: France is ready to go to the World Trade Organization to challenge US President Donald Trump’s threat to put tariffs on French goods in a row over a French tax on internet companies, its finance minister said on Sunday.

“We are ready to take this to an international court, notably the WTO, because the national tax on digital companies touches US companies in the same way as EU or French companies or Chinese. It is not discriminatory,” Finance Minister Bruno Le Maire told France 3 television. Paris has long complained about US digital companies not paying enough tax on revenues earned in France.

In July, the French government decided to apply a 3 percent levy on revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

Washington is threatening to retaliate with heavy duties on imports of French cheeses and luxury handbags, but France and the EU say they are ready to retaliate in turn if Trump carries out the threat. Le Maire said France was willing to discuss a global digital tax with the US at the Organization for Economic Cooperation and Development (OECD), but that such a tax could not be optional for internet companies.

“If there is agreement at the OECD, all the better, then we will finally have a global digital tax. If there is no agreement at OECD level, we will restart talks at EU level,” Le Maire said.

He added that new EU Commissioner for Economy Paolo Gentiloni had already proposed to restart such talks.

France pushed ahead with its digital tax after EU member states, under the previous executive European Commission, failed to agree on a levy valid across the bloc after opposition from Ireland, Denmark, Sweden and Finland.

The new European Commission assumed office on Dec. 1.