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Trade rep.: US nearing end of China talks, working on metals tariff exclusions

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Trade rep.: US nearing end of China talks, working on metals tariff exclusions

U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee on March 12 that he hopes trade talks with China are in the final weeks but cautioned that major issues still must be resolved to reach a ceasefire in the crippling trade war.

The hearing centered on long-standing American officials' qualms with the World Trade Organization. Many of the questions senators posed surrounded the status of trade talks with China as the two countries race to secure a deal to end an ongoing trade war, which has resulted in tariffs on $250 billion of U.S. imports from China and retaliatory tariffs on $110 billion of American exports to the Asian nation.

Lighthizer told the panel that he and Treasury Secretary Steven Mnuchin spoke with Chinese negotiators on the phone the evening of March 11. He noted that the pair planned more phone conversations March 13 and outlined a multipart agreement that will probably exceed 110 pages.

Lighthizer declined to set a specific time frame for when a deal may be reached, although he hoped Beijing and Washington are in the final weeks of negotiations. He also declined to answer questions from senators on if and when U.S. tariffs may come off Chinese goods.

"Something's either going to have a good result or we're to have a bad result before too long, but I'm not setting a specific time frame," Lighthizer said.

"The president will tell me when time is up or the Chinese will," he added.

President Donald Trump and Chinese President Xi Jinping have planned a meeting for late March or April, though White House Press Secretary Sarah Sanders said March 11 that the two leaders had not yet set a date, adding that "when they feel like it's time for the two leaders to sit down, we'll make that happen."

Lighthizer also briefly touched on the United States-Mexico-Canada Agreement, the trilateral deal between the three North American nations that is subject to approval by the Senate Finance Committee as well as the House Ways and Means Committee and the full chambers. The trade representative said he is "very much engaged" with Ottawa and Mexico City on the issue of removing tariffs on U.S. imports of steel and aluminum from those countries.

Both countries failed to obtain an exemption from a 25% tariff on steel imports and a 10% tariff on aluminum imports Trump imposed in May 2018.

Several Finance members, including Sen. Rob Portman, R-Ohio, a former U.S. trade representative, warned during the hearing that the metals tariffs could impede the ratification of the USMCA.

Lighthizer said the three countries are in discussions to find "a way out of the dilemma both for them and for us," adding that there is a "sweet spot" where Washington can please both of its neighbors as well as maintain the integrity of the metals program.

"It's a very high priority with both of them on this subject," Lighthizer said. "I find myself in this position not able to predict when the end of negotiations will be. But I can assure they eventually will end."

He also hinted that a pending U.S. Commerce Department Section 232 investigation into imports of automobiles and auto parts, which could very well lead to a 25% tariff on those imports, would not apply to Mexico and Canada.

"With respect to USMCA provisions ... that would take them out of whatever we do," Lighthizer said.

Issues with World Trade Organization procedures were a noticeable bipartisan issue at the hearing, with members of both parties outlining loopholes, including developed countries self-designating as developing countries in order to receive benefits and a lack of enforcement provisions to hold member countries, especially China, accountable for their commitments.

"The Chinese government identified weaknesses in the WTO system, and it seizes on them to further its economy's explosive growth," Sen. Ron Wyden, an Oregon Democrat and committee ranking member, said at the hearing.

A WTO dispute settlement panel recently found that China was artificially raising its prices for its rice and wheat, something the U.S. contends is hurting American farmers and agriculture exporters.