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US trade chief sees long-term China challenges, tariff threat

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WASHINGTON: The United States will need to maintain the threat of tariffs on Chinese goods for years even if Washington and Beijing strike a deal to end a costly tariff war, President Donald Trump’s chief trade negotiator told lawmakers on Wednesday.


US Trade Representative Robert Lighthizer cautioned that much work was still needed to nail down a US-China trade agreement, including working out how it will be enforced.


“If we can complete this effort - and again I say if ... we might be able to have an agreement that helps us turn the corner in our economic relationship with China,” Lighthizer said in testimony to the US House Ways and Means Committee.


The two countries have imposed tit-for-tat tariffs on hundreds of billions of dollars worth of each others’ goods, roiling financial markets, disrupting manufacturing supply chains and shrinking US farm exports.


Lighthizer said USTR was taking legal steps to implement Trump’s decision on Sunday to delay a tariff increase on more than $200 billion worth of Chinese goods that had been scheduled for Friday.


But USTR later clarified in a statement that it was not abandoning the threat of increasing the tariffs to 25 per cent from 10 per cent. It said a Federal Register notice would be published this week that would suspend the increase “until further notice.”


Lighthizer detailed a long road ahead to resolve US China trade issues, and said that tariffs would remain an important tool to push China to make structural policy changes sought by Trump and lawmakers.


“The reality is this is a challenge that will go on for a long, long time,” Lighthizer said. He earlier said he “is not foolish enough” to believe that a single negotiation will change the increasingly sour bilateral trade relationship.


“If there is disagreement at my level, the US would expect to act proportionately but unilaterally,” Lighthizer added.


A perennial threat of tariffs would be disappointing news for industry, which is hoping to see an end to the trade war uncertainty that has paralysed China investment decisions.


Lighthizer’s cautious comments about a China deal prospects sent US stocks lower in morning trade, but Wall Street steadied somewhat after US Federal Reserve Chairman Jerome Powell told a separate hearing that the Fed would stop shrinking its $4 trillion balance sheet later this year.[.N]


‘MOST SEVERE CHALLENGE’


The issues that the United States faces with China are “too serious” to be resolved by promises to purchase more US goods and structural change by China is needed, Lighthizer said.


China has offered to purchase an additional $1.2 trillion of US products over six years, people familiar with the talks have said, which would be welcome relief to farmers and businesses hit hard by Beijing’s retaliatory tariffs.


But lawmakers have urged the Trump administration not to allow potential big-ticket purchases to distract him from pursuing an end to what the United States alleges are unfair trade practices.


China represents the “most severe challenge” ever faced by US trade policy makers and congressional support has been “critical in persuading China” to take Washington’s concerns more seriously, Lighthizer said on Wednesday.


The United States has accused Beijing of forcing US companies doing business in China to share their technology with local partners and hand over intellectual property secrets. China denies it engages in such practices.


Trump administration officials also object to non-tariff barriers in China, including industrial subsidies, regulations, business licensing procedures, product standards reviews and other practices that they say keep US goods out of China or give an unfair advantage to domestic firms.


Lighthizer on Wednesday said that while some progress has been made in the talks, the United States needs to be able to take unilateral action to enforce any agreement. — Reuters


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