Washington seeks long-term contracts; Commerce Secretary Ross heading to Beijing this weekend to lead talks

A worker picks cherries during harvest in Lodi, Calif., on Tuesday. Renewed trade-related tensions with China has worried farmers across California, many of whom  grow staple products that are targeted for tariffs.
A worker picks cherries during harvest in Lodi, Calif., on Tuesday. Renewed trade-related tensions with China has worried farmers across California, many of whom grow staple products that are targeted for tariffs. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS

BEIJING—U.S. and Chinese trade negotiators are haggling over how to get Beijing to carry out recent promises to purchase more American farm and energy products, with Washington pushing for long-term contracts that Chinese officials are reluctant to commit to.

The snag is hanging over high-level negotiations scheduled for this weekend. U.S. administration officials, having said earlier that a lack of progress by the advance team might lead to Commerce Secretary Wilbur Ross canceling a trip to Beijing, said Mr. Ross remains scheduled to be in China on Saturday. The plan is for two-days of talks in Beijing with China’s top trade negotiator, Liu He, but the White House’s recent moves to revive the threat of tariffs on Chinese imports have complicated the prospects for his mission.

During the discussions, held by a U.S. advance team and its Chinese counterpart in Beijing on Thursday and Friday, U.S. officials pressed their Chinese peers to commit to multiyear purchase agreements, according to people with knowledge of the exchanges from both sides. For the U.S., such pacts could be useful in prodding China to significantly lower tariffs and ease regulations and other barriers to imported goods.

Chinese officials have been reluctant to get locked into long-term commitments, these people said. Beijing wants “control and leverage,” one of them said.

The U.S. team, which includes officials from the Commerce, Treasury, Agriculture and Energy departments and the office of the U.S. Trade Representative, was scheduled to make recommendations late Friday to Mr. Ross on whether he should travel to Beijing this weekend as planned to lead the negotiations, according to the people. Chinese officials said their government is committed to dialogue to fend off a trade war with the U.S. Mr. Ross wanted to take the trip to maintain conversations with Beijing, the people said.

The trip was initially seen as a positive move in the months of wrangling between the U.S. and China over trade, a follow-up after both sides declared a truce two weeks ago. On Tuesday, however, the Trump administration unexpectedly declared it would move forward with tariffs on $50 billion in Chinese goods and take other actions aimed at restricting China’s access to U.S. technology.

The U.S. team led by Mr. Ross is aiming to secure a deal in which China would buy more U.S. soybeans, beef, poultry, natural gas and crude oil, among other agricultural and energy products. The U.S. hopes that such purchases would narrow its trade deficit with China, which stood at $375 billion last year. President Donald Trump wants the trade gap slashed by at least $200 billion by 2020.

In negotiations in May in Washington, a Chinese team led by Mr. Liu, President Xi Jinping’s economic envoy, agreed to try to step up purchases of U.S. goods, though it declined to commit to any numerical targets. In the Beijing talks this week, Chinese negotiators again have resisted agreeing to specific, long-term commitments.

One reason for the Chinese side wariness to make concessions are President Trump’s looming tariffs and restrictions on Chinese investments, according to the people. On top of that, a divide between Trump administration factions also casts doubt over how long any trade deal can last, these people said.

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A group led by Treasury Secretary Steven Mnuchin has been pushing for a deal centered on boosting U.S. exports to China, while another led by U.S. Trade Representative Robert Lighthizer is looking for more significant changes in how China treats foreign companies—and is more willing to resort to trade sanctions even if they disrupt financial markets.

China’s chief trade negotiator, Mr. Liu, so far has had the blessing of President Xi to use the U.S. pressure to accelerate plans to liberalize financial markets, the auto sector and other industries, according to Chinese officials. But he is also running up against growing nationalist calls for Beijing to take a tougher stance against U.S. demands. Many state-owned companies, for instance, have a strong interest in keeping foreign competitors at bay.

Those differences suggest that rather than a breakthrough, Washington and Beijing are likely in for a long haul of recurring talks, economists and analysts in both countries said.

Meantime, as U.S.’s plans to impose levies on imports from its allies prompt anger and retaliation from countries including Canada and Mexico, China is trying to line up other countries against Washington by enticing them with greater access to Chinese markets. On Friday, China’s Finance Ministry released a list of more than 1,000 products that will be subject to lowered import tariffs, starting July 1.

Chinese consumers have long complained about having to pay much higher prices for Bvlgari jewelry, Rolex watches and other imported items sold on the mainland. By cutting the tariffs, Beijing is also hoping to spur domestic consumption as a way to offset any weakening of trade and to keep the economy on an even keel.

“To counter the effects from the U.S.-China trade conflict, China should continue to open its markets to the rest of the world,” said Zhang Ming, a senior economist at the Chinese Academy of Social Sciences, a government think tank in Beijing.

Write to Lingling Wei at lingling.wei@wsj.com

COURTESY: WSJ

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