By David Lawder and Cate Cadell
WASHINGTON/BEIJING (Reuters) – Aiming to jumpstart dormant talks, the top U.S. trade negotiator said on Wednesday he will confer with his Chinese counterpart before next week’s meeting between President Donald Trump and Chinese President Xi Jinping in Japan as the two countries take another shot at resolving their damaging trade dispute.
Trade talks between the world’s two largest economies broke down more than six weeks ago after U.S. officials accused China of backing away from commitments, prolonging a costly trade dispute that has harmed the global economy and disrupted supply chains.
U.S. Trade Representative Robert Lighthizer told a congressional hearing he will speak by telephone with Liu He, China’s vice premier and chief negotiator in the trade talks, “in the next day and a half” and then expects to meet with Liu in Osaka, site of the June 28-19 G20 summit, along with U.S. Treasury Secretary Steven Mnuchin before Trump’s meeting there with Xi.
“I think it’s in the interests of both China and the United States to have some kind of successful agreement. The president (Trump) has said he definitely wants an agreement if we can get a great agreement for America,” Lighthizer told the House of Representatives Ways and Means Committee.
Since two days of talks to resolve the dispute last month in Washington ended in a stalemate, interaction on trade between the two countries has been limited, and Trump has threatened to put more tariffs on Chinese products in an escalation that businesses in both countries want to avoid.
It is unclear when the formal U.S.-China trade negotiations will restart but the United States is “certainly willing to engage” with China in the discussions, Lighthizer testified.
“We have a very unbalanced relationship with China and we have one that risks literally the jobs of the future,” Lighthizer said.
China said on Wednesday positive outcomes were possible in trade negotiations with the United States, after Trump and Xi agreed to revive their troubled talks at the June 28-29 G20 meeting. The two leaders spoke by telephone on Tuesday. Trump said he would meet Xi at the G20 summit, a meeting that China confirmed.
Washington has already imposed 25% tariffs on $250 billion of Chinese goods, ranging from semi-conductors to furniture, that are imported to the United States.
Trump has threatened to put tariffs on another $325 billion of goods, covering nearly all the remaining Chinese imports into the United States, including consumer products such as cellphones, computers and clothing.
China has responded to U.S. tariffs with levies of its own. In response to queries from lawmakers about the U.S. trade team’s efforts to get those lifted, Lighthizer said that getting rid of the Chinese retaliatory tariffs and securing commitments by China to increase purchases of U.S. goods such as agricultural commodities are important American goals in the talks.
The United States has pressed China to change its practices on intellectual property theft and requirements that U.S. companies share their technology to do business in China.
The CEOs of at least five U.S. companies are scheduled to meet Chinese Premier Li Keqiang this week in Beijing, Bloomberg reported on Wednesday, citing people familiar with the matter. The companies include Dow Inc, United Parcel Service Inc, Pfizer Inc and Honeywell International Inc, Bloomberg reported.
Speaking at a daily news briefing, China’s foreign ministry spokesman Lu Kang said it was important to find a solution that was acceptable to both sides.
“I’m not getting ahead of myself, but communication over four decades shows it is possible to achieve positive outcomes,” Lu said.
“The two leaders will talk about whatever they want,” Lu added. “A deal is not only in the interests of the two peoples but meets the aspirations of the whole world.”
News that the U.S.-Chinese negotiations were back on the agenda boosted China’s stock markets, with the blue-chip CSI300 index ending 1.3% higher while the Shanghai Composite Index rose 1.0%.
U.S. stocks rose after the Federal Reserve held interest rates steady and signaled potential cuts later this year, reassuring investors worried that the U.S.-China trade war could stall economic growth.
There was fresh evidence on Wednesday of the disruption in supply chains arising from the U.S.-Chinese trade tensions.
Apple Inc has asked its major suppliers to assess the cost implications of moving 15% to 30% of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, according to a Nikkei Asian Review report on Wednesday.
Apple’s request was a result of the extended Sino-U.S. trade dispute, but a trade resolution will not lead to a change in the company’s decision, Nikkei said, citing multiple sources. The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, Nikkei said.
Key iPhone assemblers Foxconn, Pegatron Corp, Wistron Corp, major MacBook maker Quanta Computer Inc, iPad maker Compal Electronics Inc, and AirPods makers Inventec Corp, Luxshare-ICT and Goertek have been asked to evaluate options outside of China, Nikkei reported.
The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said.
In another development, the United States has fined several companies for exporting goods via a Chinese-owned special economic zone in Cambodia in a bid to dodge Trump’s tariffs on Chinese imports, Arend Zwartjes, a U.S. Embassy spokesman in Phnom Penh, told Reuters.
(Reporting by Cate Cadell in BEIJING and David Lawder in WASHINGTON; Additional reporting by Chris Prentice in NEW YORK, Beijing newsroom and Ben Blanchard, Prak Chan Thul in PHNOM PENH; Writing by Will Dunham; Editing by Darren Schuettler and Susan Thomas)