President Trump denies he agreed to phased rollback of extra tariffs
November 12, 2019 Category Foreign trade, Weekly
“They’d like to have a rollback but I’ve not agreed to anything,” Donald Trump told reporters
U.S. President Donald Trump denied that he agreed to a phased rollback of tariffs, days after China’s Ministry of Commerce (MOFCOM) said the two countries had agreed to remove additional tariffs in phases, with both sides working to wrap up an interim trade agreement. In what will be seen as an attempt to extract fresh concessions from President Xi Jinping, Trump told reporters there was not a deal in place to reduce any levies on Chinese goods. Ministry Spokesman Gao Feng said China and the U.S. had extensive and serious discussions over the past two weeks to try to end their trade war, and the agreement would help stabilize the world economy. The proportion of tariffs canceled for both sides to reach a “phase one” deal must be the same, but the number to be canceled can be negotiated, he added. Tariffs Hurt the Heartland, a U.S. anti-tariff advocacy group, said that U.S. consumers and businesses paid an additional USD38 billion in tariffs from February 2018 to September 2019 due to the trade conflict.
“They’d like to have a rollback but I’ve not agreed to anything,” Trump said. “China would like to get somewhat of a rollback, not a complete rollback because they know I won’t do it. We’re getting along very well with China. They want to make a deal, frankly they want to make a deal a lot more than I do. I’m very happy right now, we’re taking in billions of dollars,” according to Trump as reported by the Guardian. He added that trade talks with China were moving along “very nicely,” but the United States would only make a deal with Beijing if it was the right deal for America. Trump’s denial cast doubts on the possibility of reaching a phase one deal, as MOFCOM Spokesman Gao had said: “If China and the U.S. reach a phase one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously. The trade war started with tariffs, and should end with the cancellation of tariffs”.
Former U.S. Treasury Secretary Lawrence H. Summers said that the U.S. has ‘legitimate concerns’ about technology and China should be willing to address them. A partial deal by the United States and China to de-escalate the 16-month trade war will reduce the uncertainty weighing on global business sentiment, even if it will not resolve the underlying issues that drove the world’s two largest economies into a tariff battle, he added. The deal, dubbed “phase one” by U.S. .President Donald Trump, and expected to be sealed before a 15% tariff on USD160 billion of Chinese import kicks in on December 15, would “probably act as a spur to growth”, said Summers, who was Treasury Secretary during the Bill Clinton administration, and Director of Barack Obama’s National Economic Council. The comment by Summers underscores how a “grand deal” to solve the disputes between the two countries is probably not to be expected. Instead, tensions will remain high “as long as China remains a substantial economic success” story, Summers said.
In related trade news, negotiations on the Regional Comprehensive Economic Partnership are advancing. Addressing the 22nd ASEAN -China, Japan and South Korea (10+3) leaders’ meeting, Chinese Premier Li Keqiang noted that the 15 member states of the RCEP have concluded all negotiations on the text and on market access. However, “India has significant outstanding issues, which remain unresolved,” according to a joint statement issued after the summit. Leaders attending the meeting pledged to sign the RCEP agreement in 2020. Premier Li Keqiang also said that China was willing to accelerate negotiations on the China-Japan-Republic of Korea free trade area. Initiated in 2012 by ASEAN, RCEP is a regional free trade agreement between the 10 member states of ASEAN and its six partners – China, Japan, South Korea, Australia, New Zealand and India. Once in operation, it will become the world’s largest free trade agreement, covering 32.2% of global GDP and 3.5 billion people, or almost half of the world’s population. RCEP economies account for 29.1% of global trade and about one-third of global investment inflows.
Meanwhile, China and New Zealand concluded negotiations to upgrade their bilateral Free Trade Agreement (FTA) as Premier Li Keqiang met his New Zealand counterpart Jacinda Ardern. Li said the upgrade showed that the two countries support free trade with concrete actions. Prime Minister Ardern congratulated China on the considerable improvement of its global ranking in the ease of doing business, adding that the conclusion of negotiations to upgrade the bilateral FTA with China would bring more opportunities for mutually beneficial cooperation, the Shanghai Daily reports.
China’s exports fell by 0.9% in October, better than the 3.2% drop in September, and better than analysts had expected. To some it was a sign of a possible ‘stabilization’, but most analysts remained cautious, suggesting that it was still “hard to be optimistic about the outlook”. “There are some signs of stabilization for exporters. And with the possible rollback of tariffs, next year is very likely to stage a recovery for exports,” said Gai Xinzhe, Senior Analyst at Sino-Ocean Capital in Beijing. Exports to the U.S. dropped 11.3% in the January to October period, while exports to the European Union rose 5.1% and those to the 10-member ASEAN bloc jumped 10.4%. Imports continued to struggle, falling for the ninth time in the last 10 months.
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