November 15, 2018 / 8:20 PM / a month ago

Exclusive: China offer unlikely to spur major trade breakthrough - senior U.S. official

WASHINGTON (Reuters) - China’s written response to U.S. demands for trade reforms is unlikely to trigger a breakthrough at talks between Presidents Donald Trump and Xi Jinping later this month, a senior Trump administration official told Reuters on Thursday.

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018. REUTERS/Aly Song/File Photo

Beijing provided the Trump administration with its document earlier this week, responding to a months-long request from U.S. officials for commitments that would jumpstart trade talks, Reuters reported on Wednesday.

It was a good sign that Beijing had put something in writing after months of declining to do so, the official said, speaking to Reuters on condition of anonymity.

The Chinese document included 142 items divided into three categories: issues the Chinese are willing to negotiate for further action, issues they are already working on and issues they consider off limits, the official said.

The items on Beijing’s non-negotiable list were unacceptable to the United States, the official said, and the overall list deserved to be looked at with skepticism in part because China has previously made pledges on economic and trade reforms that it had not fulfilled.

He cited as an example a past offer by China to loosen restrictions on U.S. ownership of Chinese companies, and said that China had subsequently failed to follow through with licenses for U.S. companies.

U.S. officials were still studying the list, which the official said was received on Monday night.

With the G20 summit only two weeks away, the official played down expectations of a major breakthrough on substantive issues on trade during talks between Trump and Xi at the gathering of world leaders in Argentina at the end of November.

A best-case scenario could be that the two leaders agreed to keep talking and declare the issue is moving in a better direction, the official said.

It was too early to tell whether China’s offer would be sufficient to preclude an increase in U.S. tariffs at the start of 2019, he said.

Trump has imposed tariffs on $250 billion of Chinese imports to force concessions from Beijing on the list of demands that would change the terms of trade between the two countries. China has responded with import tariffs on U.S. goods.

The tariff rate on $200 billion in Chinese goods is set to increase to 25 percent from 10 percent on Jan. 1.

Trump has also threatened to impose tariffs on all remaining Chinese imports, about $267 billion worth, if Beijing fails to address U.S. demands.

Trump, who has made it clear he values his relationship with Xi, and some members of his administration have been optimistic in recent public statements on the possibility of a deal.

Another source who has been briefed on the status of U.S.-China negotiations said that the negotiations between the two sides on trade had yet to advance in line with the more positive rhetoric.

The person said China’s offer was “a rehash” of previous commitments articulated by Xi.

One option for a deal, the person said, would be for Washington to hold off on raising tariff rates in return for some short-term actions by the Chinese while the two sides negotiate thornier, longer-term issues.

FILE PHOTO - U.S. President Donald Trump delivers his speech as he and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj

Trump’s chorus of economic advisers continue to provide different views on China.

Peter Navarro, a trade adviser who has advocated harsh measures against China, was admonished publicly this week by economic adviser Larry Kudlow for “freelancing” with recent remarks in which he urged Wall Street not to interfere on the issue.

Despite that, Navarro continued to play a role in trade policy discussions at the White House, the administration official said.

Reporting by Jeff Mason and Steve Holland in Washington; additional reporting by David Lawder; Editing by Simon Webb, Cynthia Osterman and James Dalgleish

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