Treasury Secretary Steven Mnuchin was on the Senate floor during the vote, shaking hands and exchanging congratulations with Republican senators.
WASHINGTON: The U.S. and China have agreed on an enforcement mechanism for their potential trade deal, Treasury Secretary Steven Mnuchin said, suggesting one of the key stumbling blocks toward an accord had been cleared.
“We’ve pretty much agreed on an enforcement mechanism,” Mr. Mnuchin said Wednesday in an interview with CNBC. “We’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters. This is something both sides are taking very seriously.”
Others closely monitoring the talks, however, expressed caution that key hurdles remain, including reaching an agreement on lifting the tit-for-tat tariffs both countries have imposed.
“The devil is in the details, notwithstanding Secretary Mnuchin’s encouraging comments,” said Myron Brilliant, executive vice president of the U.S. Chamber of Commerce. Mr. Brilliant talks regularly to senior trade officials in both countries.
A spokeswoman for Robert Lighthizer, the U.S. trade representative, declined to comment. The White House didn’t respond to a request for comment.
Chinese government officials weren’t immediately available for comment.
Mr. Mnuchin didn’t give details of the enforcement mechanism, but Mr. Lighthizer previously has said that U.S. officials were seeking to negotiate an enforcement mechanism that would include regular meetings between U.S. and Chinese officials over alleged trade violations.
Complaints would be discussed in a series of consultations, Mr. Lighthizer has said—monthly by staffers, quarterly by vice ministers and twice-yearly by ministers of the two nations. The biannual consultations likely would involve Mr. Lighthizer and Chinese Vice Premier Liu He, China’s special envoy on trade.
U.S. officials have identified an enforcement mechanism as one of the key remaining hurdles to settling the yearlong trade dispute, but others remain. They include better protection of U.S. intellectual property and an end to the forced transfer of technology from American companies to their Chinese counterparts.
Beijing, meanwhile, wants the U.S. to lift tariffs on Chinese imports as part of the trade deal, while the U.S. is seeking to keep tariffs in place until China can show it is abiding by the accord.
“In my view, enforcement and tariffs are critical issues that are linked,” Mr. Brilliant said in an interview. “At the end of the day, the Chinese will not agree to a final package without tariffs being removed and the U.S. in return must have assurances that the enforcement mechanism has teeth. Yes, the two sides have had robust discussions on enforcement but nothing is final until a comprehensive packaged is agreed to.”
Senate Finance Committee Chairman Chuck Grassley (R., Iowa), whose panel oversees trade policy, hailed news of progress on Wednesday but pointed out that Mr. Lighthizer hadn’t yet corroborated Mr. Mnuchin’s remarks.
“There’s only one caveat…Mnuchin making the statement instead of Lighthizer making the statement,” Mr. Grassley said. “Mnuchin is a little softer on trade issues with China than Lighthizer is, but they’re a team so maybe they’re on the same page.”
“Enforcement is a very important thing otherwise all the accomplishments you have would be hollow victories,” Mr. Grassley added.
President Trump met with Mr. Liu last week in the Oval Office amid the latest round of negotiations. While expressing optimism, Mr. Trump didn’t announce a summit, something that was anticipated, and said it could be weeks before a deal is reached.
Mr. Mnuchin declined to comment when asked if the U.S. had agreed to lift tariffs as part of the deal. “We’re really focused on the execution of the documents,” he said.
In an appearance at an International Monetary Fund conference later Wednesday, Mr. Mnuchin said that the two sides have nearly completed a currency agreement, which would ultimately limit Beijing’s ability to manipulate the value of its currency for an unfair trade advantage.
“There still are some very significant issues, but if we’re able to get this done, this would be the most significant change in the economic relationship with China and the U.S.,” Mr. Mnuchin said at the IMF. He said the deal would “open up structural changes in the China economy to make them more competitive, which I think will be very good for their growing middle class.”
The U.S. is also pressing China to agree to a no-retaliation clause in a trade deal, meaning the U.S. could impose tariffs on China in the case of an unresolved dispute and China would forgo the right to retaliate. China has rebuffed that so far. - WSJ
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