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November 15, 2019 10:15 AM, EST

US Signals China Trade Talks in Final, Hardest Steps to a Deal

Containership at Xiamen, ChinaA containership at the Haitian Container Terminal in Xiamen, China, on Aug. 26. (Qilai Shen/Bloomberg News)

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President Donald Trump’s administration signaled talks with China over the first phase of a broad trade agreement are entering the final stages when the most contentious and complex issues are debated, with no guarantee that another breakdown will be averted.

White House Economic Adviser Larry Kudlow told reporters late Nov. 14 in Washington, “We are coming down to the short strokes [and are] in communication with them every single day.”

Larry Kudlow

Larry Kudlow by Andrew Harrer/Bloomberg

Commerce Secretary Wilbur Ross, speaking Nov. 15 on Fox Business Network, confirmed there will be a high-level call, adding that there’ll be a deal “in all likelihood.”

As U.S. stock futures advanced on optimism for the world’s largest economies, both officials added caveats, with Kudlow acknowledging a deal was close though not done yet.

Ross said, “The devil is always in the details, and we’re down to the last details now.”

The Nov. 15 call of top trade negotiations from both countries is a sign of progress. Still, the last stages of trade agreements often are where talks break down, and Trump still hasn’t publicly indicated his approval. The sides were close to concluding a pact about six months ago, only for the U.S. to claim that China backed away from verbal commitments when the time came to sign the deal.

“You don’t really have the deal on anything, until you have the deal on everything,” Ross said. “So it’s not surprising that at the very last minute pieces are bouncing around. But I think the main thing is what the president said at the rally last night: China wants to make a deal. We think we’d like to make a deal if it’s the right deal — this will get made in all likelihood.”

Ross described phase one as “relatively limited in its scope.”

“And what’s really being debated is how much limitation will there be on the scope of phase one relative to phase two or maybe phase three,” he said.

The sides have held working-level video conferences in recent days focused on issues ranging from the details and timeline of Chinese purchases of U.S. agricultural goods such as pork and soybeans to commitments to curtail theft of intellectual property that Trump is demanding from China, according to people familiar with the discussions.

A U.S. demand that China spell out how it plans to reach as much as $50 billion in agricultural imports annually has been one sticking point as have discussions over what action the U.S. will take to roll back tariffs in return for a phase one deal, the people said. China has reiterated its position that removing existing tariffs is a condition of reaching a deal.

Still, both countries have sent signals that they are intent on an agreement. China has resumed significant purchases of U.S. farm exports since Trump first announced plans for the phase one deal Oct. 11. On Nov. 14, Beijing also lifted a ban on American poultry that began in 2015, after the U.S. Department of Agriculture made a similar decision to allow Chinese poultry into the U.S.

“This is great news for both America’s farmers and China’s consumers,” U.S. Trade Representative Robert Lighthizer said in a statement after the lifting of the Chinese ban was announced. The government estimates American producers will be able to export more than $1 billion worth of poultry to China annually, he said.

Separately, Kudlow said the president had not yet made a decision on whether to impose — or delay, as many expect — new auto tariffs on imported cars and parts from the European Union. The president received a report from Lighthizer’s office and he is considering it, Kudlow said.

With assistance from Zoe Schneeweiss

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