US Trade Representative Robert Lighthizer conferring with Chinese Vice-Premier Liu He in the White House. Photo: AFP

After a phone call between Trump administration officials and their Chinese counterparts to discuss ongoing trade talks, US trade chief Robert Lighthizer told lawmakers on Tuesday that staffs on the two sides were working “continuously” to reach a deal.

But Lighthizer also cautioned that an agreement is not assured, and stipulated one demand that China has publicly expressed resistance to in recent days.

“We have to maintain the right to be able to – whatever happens to the current tariffs – to raise tariffs in situations where there’s violations of the agreement,” he said at a hearing before the Senate Finance Committee. “And that’s the core. If we don’t do that, then none of it makes any difference.”

The issue of the US retaining the right to reimpose tariffs unilaterally as an enforcement mechanism has been one of several sticking points identified in recent weeks. Such a stipulation creates a dilemma as China has strongly objected to it being one-sided, and yet one of the key US concessions in a potential deal would be to lift tariffs.

In such a scenario, the Americans would be breaking their end of the bargain by raising tariffs in response to a breach by China, triggering another cycle of tit-for-tat retaliation. On the sidelines of the National People’s Congress on Friday, Chinese Vice-Minister of Commerce Wang Shouwen suggested as much when he said that any enforcement mechanism must “go in both directions.”

Nevertheless, Lighthizer’s testimony painted a picture of a comprehensive process that is in an advanced stage, reminiscent of the final days of negotiations between the US and Canada before they reached agreement on an overhaul of the North American Free Trade Agreement.

In that case, uncertainty and unresolved issues remained until the eleventh hour, but Lighthizer was eventually able to smooth over differences with his Canadian counterpart.

In reference to a call between himself and Treasury Secretary Steven Mnuchin and China’s top trade negotiator Vice-Premier Liu He, Lighthizer stressed the complexity of the agreement that is taking shape.

“We’re going through a lot of issues. They are very, very complicated issues … if we have an agreement it will be 100, 120 pages.…  Our staffs are giving drafts back and forth, so this is a process that’s ongoing. I’ll be on the phone again with them tomorrow,” he said, shedding light on the intensity of the talks.

The framework of the agreement will take the form of individual sections on the numerous key areas of contention, each with very detailed provisions, the trade representative said. For issues such as the alleged forced transfer of technology, crafting the specifics is a very complicated process and might take up around 20 pages of text.

“In terms of timeframe, our hope is that we are in the final weeks of an agreement, but I’m not predicting one,” he said when pressed about how businesses can make investment decisions with such uncertainty.

“There still are major, major issues that have to be resolved,” Lighthizer warned. “I can’t predict success at this point”

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