snapshots

Jul 20, 2017 | 18:40 GMT

2 mins read

China, U.S.: After a 100 Days of Work, Diplomats Have an Unsurprising Lack of Progress to Show

(Stratfor)

The latest saga in trade relations between China and the United States ended not with a bang, but with a fizzle. The inaugural comprehensive dialogue meeting on July 19 failed to produce any concrete agreements — an outcome that was forecast early on by the cancellation of post-talk press conferences. An anonymous U.S. official said parties discussed U.S. requests to address the glut of Chinese Steel, subsidization of Chinese state-controlled companies and also pushed for China to reduce tariffs on automobiles. Chinese Vice Premier Wang Yang chaired the gathering in conjunction with U.S. Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross. Statements from both the United States and China emphasized cooperation to reduce the U.S. trade deficit with China.

The lackluster outcome is not surprising. The 100-day trade action plan period, which ended July 16, concluded with Chinese concessions only on items of relatively minimal import — and even those concessions were not complete. The next phase of talks will move into areas much harder for China to address. Beijing has struggled to enforce attempts to cut down on steel overcapacity, for example. And it is hesitant to move forward with tough restructuring of state-owned enterprises or to loosen controls on investment and capital flows. Because the landmark 19th Party Congress is approaching, China will delay substantial reforms and has worked to frame the U.S. trade talks as a one-year plan. Despite this, there is a clear gap between expectation and what is deliverable.

The United States' next move could be to finally impose new tariffs on Chinese steel: U.S. President Donald Trump reportedly said on July 19 that such tariffs could still move forward. But it is unclear whether he has the authority to enact the measures as part of a review of China's steel import practices as a potential threat to U.S. national security under Section 232 of the Trade Expansion Act of 1962. The pending review has drawn the ire of China as well as key U.S. allies in the Americas and Europe also subject to the review, who argue they should be exempt. It remains to be seen whether Trump will use national security as a tool to exert power in trade negotiations. 

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