As Trade Talks Reach Endgame, US-China Ties Could Hinge on Enforcement

China's Vice Premier Liu He (C) pose for a photo with U.S. Treasury Secretary Steven Mnuchin (R) and U.S. Trade Representative Robert Lighthizer (L) at Diaoyutai State Guesthouse in Beijing on March 29, 2019. (Nicolas Asfouri/Pool via Reuters)

BEIJING—U.S. negotiators head to China on April 30 to try to hammer out details to end the two countries’ trade war, including the shape of an enforcement mechanism, the success or failure of which could set the trajectory of ties for years to come.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for talks beginning on April 30, followed by a visit by Chinese Vice Premier Liu He to Washington for more discussions starting on May 8.

Both sides have cited progress on issues including intellectual property and forced technology transfer to help end a trade war marked by tit-for-tat tariffs on each other’s goods.

Those issues are still on the table, according to the White House, but U.S. officials say privately that an enforcement mechanism for a deal and timelines for lifting tariffs are sticking points.

Agreeing to a way to enforce a deal is one thing. Ensuring it holds up under ties strained by growing mistrust and geopolitical tensions will be another, say watchers of the relationship.

“An effective enforcement mechanism will define the deal,” Tim Stratford, chairman of the American Chamber of Commerce in China (AmCham), told Reuters.

“The deal doesn’t need to revamp China’s economy. But it does need to provide a new methodology for dealing with our differences,” said Stratford, a lawyer and former assistant U.S. Trade Representative who has worked in China for more than three decades.

“This is incredibly high stakes. We have a particular window of opportunity, and a lot in the future of U.S.-China relations rests on this,” he said.

At a Crossroads

President Donald Trump said on April 4 that the two sides could have a deal worked out in about four weeks. On Thursday, he said he would soon host Chinese leader Xi Jinping at the White House—a meeting seen as needed to cement an agreement.

Though a final date for a deal remains unclear, talks have brought China and the United States to a crossroads in their relationship.

China has long defined commerce as the ballast in the relationship.

Now, some warn that the two are teetering toward a new type of “Cold War,” as Beijing asserts its growing military strength in Asia and Washington ramps up scrutiny of Chinese tech companies and cracks down on Chinese espionage and influence campaigns at U.S. institutions and universities.

But years of only piecemeal economic reforms in China and continued industrial policies that U.S. companies complain have eroded their competitive edge have weakened key U.S. business sector support for China. AmCham said this month that U.S. businesses could no longer be counted on as a “positive anchor” in bilateral relations.

Lighthizer has suggested that some form of the tariffs Trump imposed last year on Chinese goods as leverage in the dispute should hang over a deal to ensure compliance.

Trade experts say China’s record of exploiting loopholes at the World Trade Organization suggests it will look aggressively for new areas where it can say the United States isn’t living up to its pledges.

Earlier this month, Mnuchin said the two sides had agreed on establishing new “enforcement offices” to police an agreement, although he did not give specifics. On Sunday, he told the New York Times talks are entering a critical point: “We’re getting into the final laps.”

By Michael Martina