Business

China, US spar over tech in trade talks

2019-03-31 15:12

China has made proposals in talks with the US on a range of issues that go further than it has before, including on forced technology transfer, as the two sides work to overcome obstacles to a deal to end their protracted trade war, US officials said this week.

US President Donald Trump imposed tariffs on $250 billion (R3.6 trillion) of Chinese imports last year in a move to force China to change the way it does business with the rest of the world and to pry open more of China’s economy to US companies.

Among Trump’s demands are for Beijing to end practices that Washington alleges result in the systematic theft of US intellectual property and the forced transfer of US technology to Chinese companies.

US companies say they are often pressured into handing over the technological know-how behind their products to Chinese joint venture partners, local officials or Chinese regulators as a condition for doing business in China. The US government says that technology is often subsequently transferred to and used by Chinese competitors.

The issue has proven to be a tough one for negotiators as US officials say China has previously refused to acknowledge the problem exists to the extent alleged by the US, making discussing a resolution difficult.

China says it has no technology transfer requirements enshrined in its laws and any such transfers are a result of legitimate transactions.

China has put proposals on the table in the talks that went further than any in the past, including on technology transfer, said one of four senior US administration officials who spoke to Reuters.

“They’re talking about forced technology transfer in a way that they’ve never wanted to talk about it before – both in terms of scope and specifics,” he said, referring to Chinese negotiators.

He declined to give further details.

Negotiators have made progress on the details of the written agreements that have been hashed out to address US concerns, he said.

Reuters reported previously that the two sides were working on written agreements in six areas – forced technology transfer and cybertheft, intellectual property rights, services, currency, agriculture and nontariff barriers to trade.

“If you looked at the texts a month ago compared with today, we have moved forward in all areas. We aren’t yet where we want to be,” the official said, speaking on condition of anonymity.

US trade representative Robert Lighthizer and Treasury secretary Steven Mnuchin arrived in Beijing on Thursday for a new round of talks with Chinese officials to work on a deal that would end a months-long trade war that has cost both sides billions of dollars and hurt global economic growth.

The in-person talks, which will be followed by a round in Washington towards the end of this week, are the first face-to-face meetings the two sides have held in weeks. They missed an initial end-of-March goal for a summit between Trump and Chinese President Xi Jinping to sign a pact.

Talks would continue as long as progress is being made on the core issues, the official said.

“It could go to May or June, no one knows. It could happen in April, we don’t know,” another administration official said.

The two sides still have different ideas over intellectual property and how to enforce a deal, he said.

SOME TARIFFS WILL STAY

China wants the US to lift its tariffs as part of a deal. Washington, which is cognisant that the tariffs give it leverage to ensure Beijing follows through on any commitments it makes, is wary of lifting them right away.

Trump said last week that the US may leave tariffs on Chinese goods for a “substantial period” to ensure compliance.

“Some tariffs will stay,” the second official said. “There’s going to be some give on that, but we’re not going to get rid of all the tariffs. We can’t.”

The topic will be addressed in upcoming talks.

“Obviously, that is an issue that we need to resolve ... and will be an important part of a final deal,” the first official said.

He said there was some agreement on enforcement on what he termed the “back end” once a deal was in place – a structure in which both sides could raise grievances and implement tariffs if there were violations to the agreement.

Since July last year, the US has imposed duties on $250 billion worth of Chinese imports, including $50 billion in technology and industrial goods at 25%, and $200 billion in other products including furniture and construction materials at 10%.

China has hit back with tariffs on about $110 billion worth of US goods, including soya beans and other commodities.

The first official said the focus of talks had shifted from Chinese purchases of US goods to the trickier structural issues, which he said Trump wanted as part of a “great” deal.

Bipartisan support at home for his tough stance on China as well as from the business community has emboldened Trump as he pushes for a deal that addresses long-standing complaints on trade, the source said.

Some officials have expressed concern that Trump would accept a deal involving big-ticket Chinese purchases of US goods and falling short on structural issues.

“Who would he be pleasing by ... selling out?” the source asked. He expressed optimism that a deal would be reached.

“I’m still confident, but it takes time,” he said.

“Until any deal is finalised, it can always go either way. And the president has made it clear, both in word and in action, that he’s going to walk away from deals if they’re not good deals.” – Jeff Mason / Reuters

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July 21 2019