China has confirmed its “commitment to increase purchases of United States agricultural exports,” the White House said Wednesday, one day after President Donald Trump lashed out at Beijing for keeping him waiting on that front.
The statement came at the conclusion of two days of meetings in Shanghai between teams led by U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He. Those discussions were the first since talks broke down in May, after the United States accused China of backtracking on commitments it made earlier.
“The meetings were constructive,” the White House said in a statement. “We expect negotiations on an enforceable trade deal to continue in Washington, D.C., in early September.”
The statement did not elaborate on what type of goods Beijing would purchase or provide a time frame for the agricultural sales. American soybean exports to China have plummeted since the U.S.-China tariff battle began last year, while U.S. pork exporters are especially eager to see export gains after African swine fever has devastated pig herds in China.
Trump and Chinese President Xi Jinping agreed at the G-20 leaders meeting in late June to restart trade negotiations, and Trump later told reporters that he expected China to immediately begin making major purchases of agricultural products. However, on Tuesday he complained loudly on Twitter that China had not followed through, exposing a potential vulnerability as he runs for reelection in 2020.
China’s official news agency, Xinhua, described the latest round of talks somewhat differently. It said the two sides discussed China making increased purchases of U.S. farm goods “according to its own domestic needs and favorable conditions to be offered by the U.S. side for the purchase.”
That’s probably an indication future purchases of agricultural goods will depend on Trump easing recently imposed national security restrictions on Chinese telecommunications giant Huawei, to allow U.S. software and semiconductor companies to continue making sales to one of their largest foreign customers, said John Frisbie, managing director at Hills & Company, an international consulting firm.
Commerce Secretary Wilbur Ross said during a visit to Brazil on Tuesday that the Trump administration next week could begin to issue special export licenses to permit American companies to sell products to Huawei. He said the Commerce Department has already received more than 50 applications for such licenses and expects to get more, Reuters reported.
“The president and I met with representatives from the supply chain industry a week ago and a number said they have not sent the requests,” Ross said. “We are interested in getting them all together to see them as a unified bloc.”
Senate Minority Leader Chuck Schumer, in a speech Wednesday on the Senate floor, said he was concerned the Trump administration would allow Huawei to make a large number of sales to U.S. customers, instead of prohibiting that business on national security grounds.
“I am told that under the proposal being talked about, 80 percent of Huawei’s products could still be sold in the U.S.,” Schumer said. He urged Trump to “stay tough” on China and to not give up “the best leverage we have” by going easy on Huawei.
U.S. farm exports to China are estimated to be the lowest in years as a result of China’s retaliation against Trump’s tariffs on $250 billion of Chinese goods. The U.S. Agriculture Department forecasts U.S. farm exports to China at just $6.5 billion in fiscal 2019, which ends Sept. 30. That’s down from $16.3 billion in fiscal 2018 and more than $20 billion annually when Barack Obama was president.
Treasury Secretary Steven Mnuchin and Chinese Commerce Minister Zhong Shan were also part of the talks in Shanghai, which focused on U.S. concerns about forced technology transfer, intellectual property rights protection, services, non-tariff barriers, and agriculture, the White House said.
Despite the reengagement in Shanghai, there are growing expectations, fed in part by Trump’s own comments, that a deal between the two countries might not be reached until after next year’s U.S. presidential election.
The U.S.-China Business Council, which represents American companies that have operations in China, said it welcomed the two countries’ decision to re-engage, as well as the progress on agricultural purchases.
But it also called for the countries “to take a pragmatic and realistic approach to compromise,” while pushing for a conclusion that opens China’s market to more foreign goods, improves the protection and enforcement of intellectual property, and levels the playing field for foreign companies operating in the market.
Frisbie, a former president of the U.S.-China Business Council, said the gap between the two countries before the talks broke down in May “was probably wider” than public comments from U.S. officials suggested at the time. That could mean a lot of tough negotiation is needed to reach a comprehensive agreement.
“I think there is a path to a deal if both sides want it and they are willing to compromise,” Frisbie said. “The U.S. could get progress on issues important for the business community and for trade. And China would have to take some actions under a deal that they can say are part of their own reform plans.”
The decision to hold the next round of talks in September, instead of later this month, as had been expected, also suggests the pace of negotiations will be slower than it was last spring.
That could be because Lighthizer has a number of other pressing projects between now and October. Those include negotiating with Democrats to try to win congressional approval of Trump’s U.S.-Mexico-Canada Agreement and negotiating with Japan in an effort to secure a limited trade deal.