By William Mauldin, Lingling Wei and Alex Leary
U.S. and Chinese officials announced a limited agreement to halt
the trade war between the countries, with President Trump removing
the threat of new tariffs on China and Beijing agreeing to
purchases of American farm goods and other products.
As part of the "phase one" deal, the U.S. canceled plans to
impose fresh tariffs on $156 billion in annual imports of
Chinese-made goods -- including smartphones, toys and consumer
electronics -- that were set to go into effect Sunday. The U.S.
will also slash the tariff rate in half on roughly $120 billion of
goods, to 7.5% from 15%.
Tariffs of 25% would remain on roughly $250 billion in Chinese
goods, including machinery, electronics and furniture.
Chinese officials said the U.S. has agreed to reduce these
tariffs in stages, but U.S. Trade Representative Robert Lighthizer
said there was no agreement on that, and he suggested China
believes such reductions can be negotiated in subsequent
phases.
For its part, China will boost American agricultural purchases
by $32 billion over previous levels over the next two years, Mr.
Lighthizer told reporters at the White House. That would increase
total farm-product purchases to $40 billion a year, with China
working to raise it to $50 billion a year, he said.
The agricultural purchases are part of a package designed to
raise U.S. exports to China by $200 billion over two years, Mr.
Lighthizer said, adding that the exact products involved will
remain classified.
Mr. Lighthizer also said China made specific commitments on
intellectual property, including counterfeiting, patent and
trademark issues and pharmaceutical rights. The
intellectual-property commitments will be announced in the future,
he said.
"This is very hard stuff," Mr. Lighthizer said. "The Chinese are
very professional, tough negotiators. Everybody compromised."
Senior officials are expected to sign the deal in early January,
with the pact entering into force 30 days later, he said.
Mr. Trump touted the agreement to reporters in the Oval Office,
calling it a "phenomenal" deal and saying the U.S. would use the
remaining tariffs as leverage in phase two of the negotiations with
China.
"I say affectionately that the farmers are going to have to go
out and buy much larger tractors because it means a lot of
business, a tremendous amount of business," Mr. Trump said.
Financial markets were mixed much of the day, however, with some
analysts saying they were awaiting more specifics.
"The devil remains in the details," Bankrate.com senior economic
analyst Mark Hamrick said. "We await further word on purported
aspects of the agreement including purchases of U.S. farm goods,
intellectual property protections, technology transfers and access
to China's financial sector."
Senate Democratic leader Chuck Schumer (D., N.Y.) criticized the
emerging deal, saying the president "cannot be relied upon to do
the right thing for American workers and businesses, even when his
statements were pointing in the right direction."
"He has sold out for a temporary and unreliable promise from
China to purchase some soybeans," Mr. Schumer said.
Mr. Lighthizer declined to specify when the two countries would
begin negotiations on phase two, where U.S. negotiators are likely
to seek further progress on knottier issues such as Chinese
pressure on American businesses to share technology and Beijing's
subsidies to domestic companies.
Mr. Lighthizer said China has agreed, through enforceable
provisions in the pact, to end the practice of forcing companies to
transfer their technology as a condition of entering the Chinese
market.
Chinese negotiators struck a more cautious tone when briefing
reporters about the progress of the trade negotiations. At a
hastily arranged press conference late Friday, held at the Chinese
leadership's main propaganda department in central Beijing, senior
Chinese officials from Beijing's major economic agencies didn't
disclose much detail on the terms, except to confirm that both
sides had reached an agreement in principle.
Vice Commerce Minister Wang Shouwen, one of China's lead
negotiators, said the U.S. had agreed to remove the remaining
tariffs on Chinese products "in stages." He and other negotiators
who attended the briefing declined to provide any details on the
tariff plan, saying the deal still needs to go through legal and
other reviews.
Many trade experts briefed by officials had expected the U.S. to
eliminate the tariffs imposed on retail goods on Sept. 1 or roll
back more tranches of tariffs, rather than merely halving the
September tariff rates, as Mr. Trump announced on Friday.
As recently as a week or so ago, U.S. negotiators presented
their Chinese counterparts with a bigger proposal that would have
required Beijing to commit to massive purchases of farm and other
products, The Wall Street Journal reported on Thursday. In
exchange, Washington would have slashed by as much as half the
tariff rates on about $360 billion of Chinese imports, in addition
to canceling the Dec. 15 levies.
But the Chinese negotiators, led by Vice Premier Liu He,
President Xi Jinping's point man on U.S. trade, balked at
guaranteeing the purchases for fear that such managed trade could
violate the rules of the World Trade Organization and cause
friction between China and its other trading partners.
At Friday's briefing, Ning Jizhe, a top deputy of the National
Development and Reform Commission, hewed to the position Beijing
has maintained throughout the negotiations: "Expanding trade
cooperation must be based on market principles and WTO rules."
That emphasis raised questions about whether China committed to
any big purchases of U.S. products at all, according to industry
experts tracking the talks. In addition, they said, the fact that
the U.S. only agreed to modest tariff reliefs as part of the
phase-one deal also shows that the purchases Beijing agreed to make
could be less than originally sought by Mr. Trump.
Chinese officials declined to specify how much China expects to
buy from the U.S. as part of the near-term deal. In addition, they
said the U.S. had also agreed to increase its imports of Chinese
agricultural products.
The trade battle between the U.S. and China has been dragging on
for nearly two years. The Trump administration initially sought a
sweeping deal from Beijing with the goal of getting the Chinese
leadership to address a range of issues, such as the vast bilateral
trade imbalance, Chinese pressure on U.S. firms to share technology
and its subsidies to domestic firms.
However, a near-agreement reached between the two sides
collapsed in early May after Beijing made substantial changes to
the draft text that China's leadership saw as too lopsided in
Washington's favor.
The trade war then intensified with both governments hitting
each other with fresh tariffs. In recent months, Mr. Trump and
Chinese President Xi Jinping both came under economic and political
pressure to ease the trade tensions. Betting on the U.S.
president's need to prop up the economy and markets in the run-up
to his re-election bid next year, Mr. Xi's team proposed what it
had sought for a while: carrying out the negotiations in
stages.
The Trump administration accepted that approach when a new truce
was declared in the Oval Office in October.
Since then, discussions between the two sides have focused on
how to get China to beef up its purchases of American farm
products. Such a move would benefit a major Trump constituency as
the 2020 campaign season gets under way.
Thornier issues involving Chinese subsidies of industry and
forced tech transfer has largely been left for future discussions.
Many in the U.S. business community remain skeptical that those
talks could bear any fruit. Mr. Trump said Friday he had planned to
start negotiations on phase two of the deal after the 2020
election, but China wanted to start the talks sooner.
Asked when the two sides will start those discussions, Liao Min,
China's vice finance minister and a trusted aide to Mr. Liu, the
chief negotiator, said: "The urgent task right now is to get the
phase-one agreement signed and implemented."
--Andrew Restuccia and Chao Deng contributed to this
article.
Write to William Mauldin at william.mauldin@wsj.com, Lingling
Wei at lingling.wei@wsj.com and Alex Leary at
alex.leary@wsj.com
(END) Dow Jones Newswires
December 13, 2019 14:32 ET (19:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.