China backtracked on nearly all aspects of US trade deal

WASHINGTON/BEIJING: The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three US government sources and three private sector sources briefed on the talks.
The document was riddled with reversals by China that undermined core US demands, the said.
In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: theft of US intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation.
US President Donald Trump responded in a tweet on Sunday vowing to raise tariffs on $200 billion worth of Chinese goods from 10 to 25 per cent on Friday — timed to land in the middle of a scheduled visit by China’s Vice Premier Liu He to Washington to continue trade talks.
The stripping of binding legal language from the draft struck directly at the highest priority of US Trade Representative Robert Lighthizer — who views changes to Chinese laws as essential to verifying compliance after years of what US officials have called empty reform promises.
Lighthizer has pushed hard for an enforcement regime more like those used for punitive economic sanctions — such as those imposed on North Korea or Iran — than a typical trade deal.
“This undermines the core architecture of the deal,” said a Washington-based source with knowledge of the talks.
Chinese Foreign Ministry spokesman Geng Shuang told a briefing on Wednesday that working out disagreements over trade was a “process of negotiation” and that China was not “avoiding problems”.
Lighthizer and US Treasury Secretary Steven Mnuchin were taken aback at the extent of the changes in the draft. The two cabinet officials on Monday told reporters that Chinese backtracking had prompted Trump’s tariff order but did not provide details on the depth and breadth of the revisions.
Liu last week told Lighthizer and Mnuchin that they needed to trust China to fulfil its pledges through administrative and regulatory changes, two of the sources said. Both Mnuchin and Lighthizer considered that unacceptable, given China’s history of failing to fulfil reform pledges. — Reuters