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Trump's trade negotiators finally get started with Beijing as 90-day clock ticks

Updated 10:03 PM ET, Mon January 7, 2019

Washington (CNN) - President Donald Trump claims his administration is "doing very well in negotiations with China," but the US team heading to Beijing this week is starting almost from scratch.

While China has made some pre-emptive concessions in the weeks since Trump met with his counterpart Xi Jinping in Argentina, including lowering auto tariffs and restarting purchases of American soybeans, little concrete progress has been made toward developing a comprehensive trade agreement between Beijing and Washington.

Instead, the meeting of deputy-level negotiators will give each side a chance to take stock and serve as a litmus test for whether a deal can be achieved before March 1, when Trump has threatened to impose another round of tariffs and to raise duties on imports to 25% from 10%.

"Next week's negotiations are important because they will establish expectations," said Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce. "However, we shouldn't expect major breakthroughs next week."

A planned visit by the Chinese delegation to the US before the Argentina encounter was scrapped in November amid a volley of threats between Xi and Trump. The two leaders spoke by phone in late December, but there's been little headway in terms of hammering out specific language.

Negotiators will meet face-to-face in Beijing on Monday for what is expected to be two days of talks on the "important agreements" reached by the two leaders in Argentina, China's Commerce Ministry announced Friday.

The delegation will be led by Jeff Gerrish, deputy to US Trade Representative Robert Lighthizer, according to a statement from the USTR.

In addition to Gerrish, the official delegation will also include David Malpass, the Treasury Department's undersecretary for international affairs. Also set to travel are USTR's chief agricultural negotiator Gregg Doud; the Department of Agriculture's undersecretary for trade and foreign agricultural affairs Ted McKinney; Commerce Department undersecretary for international trade Gilbert Kaplan and the Energy Department's assistant secretary for fossil energy Steven Winberg.

"They're going to test each other's limits in more ways than one to try to resolve these differences," said Craig Allen, president of the US-China Business Council. And it'll be clear very quickly, he said, if negotiators can't break a stalemate.

The talks come amid growing concerns about an economic slowdown in China and concurrent volatility in US markets, led in part by problems at tech giant Apple, which blamed lower quarterly revenues on "deceleration" in China.

White House Council of Economic Advisers chairman Kevin Hassett said in an interview with CNN's Poppy Harlow on Thursday that "a heck of a lot" of US companies will have the same problem unless a deal is struck to lift tariffs imposed by both sides last year.

Former trade negotiators said such commentary from top advisors for the President could be misconstrued as an opportunity for China to gain leverage over US negotiators.

"Quite frankly, I would prefer not to have Hassett, or Mnuchin making those kinds of comments, sending a signal that the Chinese could take to mean that the US really needs a deal now," said a former US trade official. "These comments wind up hurting your leverage as a negotiator. Or mislead the Chinese into thinking you can take a lesser deal."

Trump said on Friday during a Rose Garden appearance that he wasn't concerned about Apple's problems.

"I want Apple to make their iPhones and all of the great things that they make in the United States," he said.

The President, an avid market-watcher who has complained to aides for weeks about the falling Dow, nevertheless crowed in the Rose Garden about the Chinese slowdown, suggesting it will help him close a trade deal.

"I will tell you, China is not doing well now, and it puts us in a very strong position," Trump said.

Asked about the talks on Sunday, Trump told reporters that they were "going very well."

"I spoke to President Xi recently," Trump said. "I really believe they want to make a deal. The tariffs have absolutely hurt China very badly."

China's stock market has fallen by about 25% in the last year, dragged down by concerns about the impact of the trade war on China's economy, which has lost momentum in the last year as the government has tried to curb risky lending. An escalating trade war would make the situation even worse.

A new strain in the US-China relationship emerged in December when Canada announced it had carried out a US request to arrest the chief financial officer of Huawei, one of China's top tech companies. The US government is seeking the extradition of the executive, Meng Wanzhou, over alleged violations of sanctions on Iran.

The arrest highlighted the intensifying clash between the world's top two economies over technology. Huawei is key to China's efforts to become a global tech powerhouse and lead the introduction of 5G wireless technology around the world.

Another potential sticking-point could appear over China's territorial ambitions in the South China Sea. The US Navy sailed near disputed islands in the South China Sea claimed by China earlier this week, in what Beijing called a "provocation."

Chinese Foreign Ministry spokesman Lu Kang said that "the two sides are responsible for building a good atmosphere," when he was asked about whether the event could impact trade talks Monday.

While Trump has lately sounded optimistic about the prospects of the deal, saying talks were "moving along very well" and "big progress" was being made, he's also left the door open for talks to falter, if all of his concerns aren't addressed.

"If made, it will be very comprehensive, covering all subjects, areas and points of dispute," Trump tweeted after his pre-New Year's call with Xi.


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