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U.S. Strikes China Trade Deals but Leaves Major Issues Untouched

May 15, 2017

Agreements covering beef, poultry and financial services reverse stances held by the Obama administration and sidestep touchier issues such as steel.

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BEIJING — The United States has reached a set of trade deals with China covering areas like electronic payment services, beef and poultry, compromising on some Obama administration stances but leaving untouched bigger issues that could still complicate relations between the two major trading partners.

The disclosure of the deals on Thursday evening — which included an announcement that the United States would be represented at a forum in Beijing devoted to President Xi Jinping’s ambitious “One Belt, One Road” international investment initiative — suggests that the Trump administration is trying to smooth relations with Beijing despite President Trump’s harsh anti-China language on the campaign trail.

Under the newly announced deals, China set a deadline for fulfilling its promises to allow American beef and said it would speed up consideration of pending American applications to offer bioengineered seeds in China. It will also allow foreign-owned firms to provide credit-rating services in China, publish guidelines to let American firms offer electronic payment services there, and issue licenses to two American financial institutions to underwrite bonds.

The United States, in turn, said that Matthew Pottinger, a National Security Council official who plays a central role in White House policy making on Asia, would travel to Beijing with one or more Commerce Department officials for the forum this weekend. Sending a delegation recognizes the importance of Mr. Xi’s signature foreign policy to build China’s economic, financial and political ties across Asia, the Mideast, Eastern Europe and East Africa.

The Obama administration had advanced its own regional plan in the form of the Trans-Pacific Partnership, a trade deal that included 12 Pacific Rim nations but left out China. The two plans were widely seen as offering competing visions of Asia’s future. But Mr. Trump withdrew the United States from the partnership in January, effectively killing the deal.

The trade deal announced Thursday will also allow Chinese companies to export cooked poultry products and offered reassurance to China that it could buy liquefied natural gas from America.

The trade agreements did not address areas such as steel, aluminum or auto parts — areas where Chinese exports have a deep, industrywide impact. Mr. Trump criticized China’s trade practices both before and after the election, saying China was benefiting at the expense of American workers.

The Trump administration has since moderated its language, with Mr. Trump suggesting that China could strike better trade terms if it helped the United States contain North Korea’s nuclear ambitions.

Yu Jianhua, China’s deputy commerce minister, said the trade deals “have changed others’ anticipation on a potential trade war between China and the United States.”

Many of these deals actually consisted of adding new deadlines or details to agreements reached during the Obama administration. Trade officials in both countries had previously agreed that China would resume accepting American beef exports, which China has limited for more than a decade over worries about mad cow disease, but this week’s beef pact set a deadline of July 16.

Other deals were a shift from the positions of the Obama administration. It had long refused to allow imports of Chinese poultry, as the Agriculture Department had broad safety concerns about it, including the chemicals the animals are fed and the hygiene at farms and slaughterhouses. Salmonella and bird flu are also widespread problems in China, although the germs that cause them should be killed if poultry is properly cooked.

Commerce Secretary Wilbur Ross praised the deals for providing specific dates for China to act on trade pledges it has made repeatedly but not fulfilled.

He predicted that Trump administration policies would start to narrow the United States’ trade deficit with China, which is equal to more than half of the nation’s overall trade deficit.

“By the latter part of the year,” he said, “you should see something.”

Mr. Ross and his negotiators were not able to obtain a deadline for when China would issue approvals for eight kinds of American seeds that have been bioengineered to produce hardier and more productive crops.

On electronic payment services, which have become a popular alternative to cash in China, both sides appeared to make compromises. The Chinese side set a date, July 16, for permitting foreign providers of these services but would issue further guidelines for how they could be offered. The Obama administration had said China should allow foreign electronic payment services without issuing further guidelines. The United States had already fought and won a World Trade Organization case against China over payment processing.

In another American concession, the Trump administration agreed that it would not restrict United States exports of liquefied natural gas to China, except to include them in an overall daily cap on American gas exports. Some American manufacturers, particularly in the energy-hungry chemicals industry, fear China might buy so much American natural gas that the purchases would push up American natural gas prices. The first shipment of American liquefied natural gas to China arrived in China’s southern province of Guangdong last August.

On credit-rating services, Joerg Wuttke, the president of the European Chamber of Commerce in China, said on Tuesday in Shanghai that foreign companies were increasingly concerned about such services that are being developed within China. These services appear likely to measure the extent to which companies as well as individuals meet the social and political goals of the Chinese state, he said, and not just whether companies and individuals pay their bills on time.

Jeremie Waterman, the executive director for greater China at the United States Chamber of Commerce, cautiously welcomed the trade deals, while noting that he did not yet have the details. “The administration deserves credit for hopefully ensuring full and timely implementation of commitments China has already made in the areas of beef, biotech and electronic payments,” he said.

 


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