United States not to 'artificially' block Huawei from 5G market

Posted February 25, 2019

Mnuchin joined president Trump in an Oval Office meeting with Chinese Vice Premier Liu He Friday. "I think there is a very, very good chance that a deal can be made", Trump told reporters at the White House on the second day of trade negotiations with Chinese officials.

Although U.S. and Chinese officials have said the Huawei dispute is unrelated to the trade talks, Trump on Friday did not rule out that it would be part of any trade agreement.

The discussions began with a photo opportunity where U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He faced each other silently across a table in the Eisenhower Executive Office Building next door to the White House.

Trump appeared to back away from his threat to more than double tariffs on $200 billion worth of Chinese goods if no deal is achieved by March 1. If we're doing very well on the negotiations, I could see extending that.

But the President isn't the real mastermind behind the United States' muscular use of tariffs to grab more of the spoils of global trade.

Since July, the U.S. has imposed tariffs of 25% on USD50 billion worth of Chinese goods and 10% on another USD200 billion, with China retaliating in kind. The latter grouping would face the 25 per cent tariffs, too, if no agreement is reached.

In his own roundabout and scattered way of communicating, the president is calling for USA companies to compete in the networking equipment business. And countering China's economic rise has become a cornerstone of USA foreign policy.

The two sides are working towards memorandums of understanding to formalize their commitments ahead of a possible meeting between Trump and Xi.

The Australian Financial Review reported early this month that Australia's ambassador to the US, Joe Hockey, told a closed roundtable in Washington that included top Trump administration officials that he was fearful of a "pyrrhic victory" that "papered over the cracks" rather than deal with long-term differences between the US and China.

"Those proposals are all contingent upon a grand deal", he said on the sidelines of the U.S. Department of Agriculture's annual forum in Washington. Through it all, he has pushed the limits of USA trade law to favour domestic companies over foreign rivals.

It is not clear what caused Trump to tweet about mobile network technology, although it does follow remarks by Huawei's founder and president Ren Zhengfei, who appeared on U.S. television on Thursday morning.

Chinese officials have reportedly offered to buy an additional $30 billion worth of USA agricultural exports each year, more than doubling the current $24 billion figure, and to buy more American semiconductors.

"In Oval Office meeting today, the Chinese committed to buy an additional 10 million metric tonnes of USA soybeans".

Finally getting Trump's message, Lighthizer abandons his attempts at gently educating the president and goes on to declare that the terminology will be replaced with "trade agreement".

"We believe that it is very likely and we hope that we will have a deal and the Chinese society is ready to make the utmost effort", he said through an interpreter. "They're getting closer to getting an agreement". Trump answered a reporter saying MOUs would be short term when Lighthizer broke in: "An MOU is a contract".

The conflict has rattled markets. This week's round of talks in Washington was originally scheduled to last two days.

The Chinese economy, in particular, is decelerating: The IMF expects China to record 6.2 per cent growth this year, down from 6.6 per cent in 2018. "There's a lot of leverage for the U.S".

The US is calling on China to make structural changes on key issues such as stopping the theft of American technology and reining in improper subsidies and other advantages provided to state-owned companies. But he also said American businesses are demanding a deal that will bring about lasting change in Chinese behavior.