U.S., China face deep trade, IP differences in high-level talks

WASHINGTON, Jan 30: The United States and China launch a critical round of trade talks on Wednesday amid deep differences over U.S. demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 U.S. tariff hike.

The two sides will meet next door to the White House in the highest-level talks since U.S. President Donald Trump and Chinese President Xi Jinping agreed a 90-day truce in their trade war in December.

People familiar with the talks and trade experts watching them say that, so far, there has been little indication that Chinese officials are willing to address core U.S. demands to protect American intellectual property rights and end policies that Washington says force U.S. companies to transfer technology to Chinese firms.

The U.S. complaints, along with accusations of Chinese cyber theft of U.S. trade secrets and a systematic campaign to acquire U.S. technology firms, were used by the Trump administration to justify punitive U.S. tariffs on $250 billion worth of Chinese imports.

Trump has threatened to raise tariffs on $200 billion to 25 percent from 10 percent on March 2 if an agreement cannot be reached. He has also threatened new tariffs on the remainder of Chinese goods shipped to the United States.

“Clearly on the structural concerns, on forced technology transfer, there remains a significant gap if not a wide chasm between the two sides,” a person familiar with the talks told Reuters.

Chinese officials deny that their policies coerce technology transfers. They have emphasized steps already taken, including reduced automotive tariffs and a draft foreign investment law that improves access for foreign firms and promises to outlaw “administrative means to force the transfer of technology.”

A crucial component of any progress in the talks, according to top administration officials, is agreement on a mechanism to verify and “enforce” China’s follow-through on any reform pledges that it makes. This could maintain the threat of U.S. tariffs on Chinese goods long term. (Reuters)