U.S.-China Deal Enforcement Should Be Two-Way, Ex-Officials Say

(Bloomberg) -- A prospective deal between China and the U.S. to solve their trade dispute can’t put all the burden of proof that agreements are being carried out on Beijing, former Chinese officials with experience of dealing with the U.S. said.

The three ex Ministry of Commerce officials argued in interviews that, as negotiators this week continue talks aimed at producing accord before a deadline of March 1, the “strong enforcement language” that President Donald Trump has pledged will be seen as unfair unless it also binds the U.S. to address China’s own grievances.

"Enforcement verification needs to be two-way. It can’t be one-way -- say U.S. monitors China only or vice versa -- because that’s not equal and fair," said He Weiwen, a former commerce ministry official and now a senior fellow at the Center for China and Globalization in Beijing. The extent of the enforcement cannot infringe China’s sovereignty, he said.

The comments signal that an outcome where the U.S. calls the shots on enforcement post-deal would be negatively received in some quarters in Beijing. Chinese officials involved in the talks haven’t commented publicly on their stance on the matter.

So far, talks have centered on the actions that Beijing should take -- to address U.S. complaints ranging from intellectual property theft to the size of the bilateral trade imbalance -- in order to ensure that the U.S. doesn’t raise tariffs on about $200 billion of Chinese imports next month. The U.S. is also said to have demanded that China pledge not to engage in currency devaluation that would offset the higher duties.

He Weiwen said the implementation checkup should only be confined to items listed in any "Memorandum of Understanding," if that is the final format of the deal. Anything outside the MOU should not be subjected to the checkup, he said.

Zhou Xiaoming, a former commerce ministry official and diplomat, said that any accord between the world’s two biggest economies should be “win-win” in the first place before China agrees to setting up any enforcement system.

“The agreement itself should be balanced and reflect demands from both sides, and that is the foundation for such an enforcement mechanism,” said Zhou. “Otherwise, it can hardly be a fair one. It could even possibly be used an excuse for the U.S. to start new trade frictions with China in the future.”

China’s Demands

China’s demands haven’t been as publicly articulated as the Trump Administration’s, and Beijing’s negotiating stance has thus far been focused on getting removal of the tariffs imposed over the course of last year. In parallel, China has complained about the ban on certain high-tech U.S. exports to China and the treatment of its companies in the U.S. -- as well as about the crackdown on telecommunications giant Huawei Technologies Co.

Zhou also dismissed the feasibility of enlisting any third party body to monitor the implementation, as both sides would not see eye-to-eye as to which nation or multilateral organization is the best arbiter.

From the Chinese perspective, the U.S. itself doesn’t have a good track record on sticking to trade commitments. Zhou said that as the U.S. keeps pulling back from the agreements it has signed with other nations, it is doubtful whether an enforcement mechanism will really make the U.S. stick to its promises.

Wei Jianguo, a former vice commerce minister and now vice director of China Center for International Economic Exchanges in Beijing, said China is not against the idea of having an enforcement mechanism, but "we would also want the U.S. to have such a system" so that they won’t backtrack as Trump did when he tore up a deal reached by Chinese and American negotiators last May.

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