Trade frictions are seen as the main source of uncertainty for a slowing global economy, but there are more glimmers of hope for a US-China agreement. While there is no deadline for ending the protracted trade war with China, US Treasury Secretary Steven Mnuchin said Saturday the talks are nearing their conclusion, a fresh signal of progress.
Mnuchin’s remarks came on the margins of Spring meetings of the International Monetary Fund and World Bank, which were once again dominated by fears US trade policy could upset global economic growth.
The IMF predicted this week that the slowing world economy should begin to rebound in the latter part of 2019 - provided in part that the world’s top two economies resolve their differences.
In a final statement from the meetings Saturday, the IMF’s steering committee, which represents’ the organization’s 189 members, recognized the need to “resolve trade tensions” and support reforms of the World Trade Organization that have been demanded by the United States.
While the IMF itself has warned against the “self-inflicted wounds” of tariffs and trade barriers, the committee itself steered clear of what has become an unexpected hot button in a forum once devoted to trade liberalisation.
IMF chief Christine Lagarde said many officials at the meetings in Washington “actually made their views well known about the benefits of trade” for economic growth.
China’s deputy central bank governor, Chen Yulu, warned that “the protectionism of some countries has harmed mutual trust among countries,” although he did not name the United States.
In the meantime, Washington this week rattled EU nations by threatening a new set of tariffs in retaliation for subsidies to the aviation manufacturer Airbus while separately prepare for new trade talks with Japan.
Mnuchin reiterated that President Donald Trump wants his team to the focused more on a good deal with Beijing rather than on a quick one.
“It is more important to get it right than have arbitrary date,” Mnuchin told reporters. But “I’m hopeful we’re getting close to the final round of concluding issues.” In shuttle diplomacy since January between Washington and Beijing to resolve their nine-month trade war, both sides have continued to express cautious optimism without predicting success.
Mnuchin said officials in Washington and Beijing held a round of telephone talks last week, with more planned for the coming week, and are discussions on whether further in-person meetings are required.
A sticking point in the talks has been American officials’ insistence that any final agreement have teeth - and that they retain the ability to impose fresh tariffs should Beijing backslide on its commitments.
Mnuchin declined to get into details on Saturday.
“There are certain commitments the United States is making in this agreement and there are certain commitments that China is making,” he said.
“And I would expect that the enforcement mechanism works in both directions.”
“This is a very, very detailed agreement, covering issues that have never been dealt with before,” Mnuchin added, noting that the text currently had seven chapters.
Trump said last week a conclusion in the talks was probably “four weeks” away but since discussions began earlier this year to end the nine-month trade war, the finish line has repeatedly slipped further into the future.