Amid skepticism that a comprehensive trade deal between the US and China can be cobbled together before a March 1 deadline, signs continue to emerge that the gears are in motion behind the scenes.
That was on display Wednesday when US Treasury Secretary Steven Mnuchin spoke with the media about the “good progress” being made to achieve a breakthrough by the end of February. Mnuchin also confirmed that he will lead a trade delegation, along with US Trade Representative Robert Lighthizer, to China to continue talks.
“Ambassador Lighthizer and myself and a large team are on our way to Beijing next week. We are committed to continue these talks. We’re putting in an enormous amount of effort to try to hit this deadline and get a deal so that’s our objective,” Mnuchin said from the White House lawn in an interview with CNBC.
Under the direction of Trump and Xi
Mnuchin’s emergence over the past few weeks as the public voice from the White House on the trade talks marks something of a shift. It potentially reflects a diminished role for Lighthizer, a trade hawk who had been tapped to lead negotiations following a December 1 tariff ceasefire.
The US president and his Chinese counterpart, Xi Jinping, personally paved the way for an off-ramp from the trade tensions over dinner on the sidelines of the Group of Twenty summit in December, after which Trump expressed persistent optimism that a deal can be reached.
Mnuchin stressed that both sides “are working under the direction of President Trump and President Xi.”
The two leaders are set to meet in the “near future,” Trump announced recently via Twitter.
A ‘grand deal’ for Trump
Signals from sources close to officials in Washington and Beijing have given clues as to what kind of a deal can be made in the short term. While analysts say achieving concessions from the Chinese side on fundamental aspects of its industrial policy is unrealistic, there is room to give Trump a deal that could be sold to his political base as a “win.”
“My guess is that China will make offers to reverse their counter-tariffs and buy large-sounding volumes of imports from the United States, and they will promise to ‘improve’ controls on IP theft,” Albert Keidel, a former Treasury Department official who teaches about China’s economy at George Washington University, told Asia Times. “They also may pledge “to open ‘further’ to international financial firms and discipline ‘as much as possible’ linkages between joint ventures and technology transfer requirements,” he added.
“They will tailor their offers to meet Trump’s political needs with his base,” Keidel said, adding that “would allow him to say he made a ‘grand deal’ with China that satisfies his campaign promises and shows that he did what previous administrations were too timid to force out of China.”
However, such a deal, Keidel warned, might be predicated on Washington dropping a criminal case against Huawei chief financial officer Meng Wanzhou, who is facing financial fraud charges in the US. Meng was arrested by Canadian authorities in early December and is awaiting extradition hearings which could drag on for years. Trump has indicated publicly that he would be willing to consider leniency in exchange for a trade deal.
Laying the groundwork for Trump-Xi meeting
When asked about the timing of a possible meeting between the two leaders before March, Mnuchin told reporters on Wednesday that the schedule could be determined next week when delegations meet in Beijing.
“I can tell you there’s nothing planned at this time for it, but the president has talked about potentially meeting with President Xi and we’ll see what progress we make next week,” he said. “I can tell you one thing about this president. He works very hard. Wherever he is he calls me, so we’re not worried about where he is at the end of the month.”
Trump confirmed on Tuesday night that he will be meeting North Korean leader Kim Jong Un at the end of the month in Vietnam, and there has been speculation that the US president could meet Xi at some point on that trip.
Resolving the “structural” issues
When probed about the so-called “structural” issues that have driven much of the uncertainty about striking a deal quickly, Mnuchin touted progress but shied away from giving specifics.
“We are trying to reach a comprehensive agreement on a large range of issues. The good news is we have been talking about these issues for over the last year,” he said.
“One of the areas we made a lot of progress on last week is the area of enforcement. One of the things that is very important to us is that if there is a deal that it’s an enforceable deal. We don’t want this to be an agreement that is not enforced,” Mnuchin added.
The issue of a binding enforcement mechanism is consistently cited by observers as one of the most complicated.