Dive Brief:
- The U.S. and China will set up "enforcement offices" to ensure the stipulations in a trade deal are carried out, said U.S. Treasury Secretary Steven Mnuchin on CNBC Wednesday. "Both sides are taking this very seriously," Mnuchin said regarding the enforcement mechanism. Such a deal could end the ongoing trade war between the two countries.
- The current deal on the table gives China until 2025 to allow U.S. entities to wholly own businesses in China, according to Bloomberg. The enforcement offices would be responsible for monitoring this and other stipulations of the agreement, triggering retaliatory actions if the parties do not adhere to the deal.
- Mnuchin, who continued negations with Chinese Vice-Premier Liu He this week, did not confirm on CNBC whether or not tariffs currently in place would be removed in the case of a finished deal, nor did he offer a timeline for completing the deal.
Dive Insight:
"If we can complete this agreement these will be the most significant change to the economic relationship between the U.S. and China in, really, the last 40 years," said Mnuchin Wednesday.
Though an end to the China trade war would likely be welcomed by most U.S. businesses, this news from Mnuchin is much more comforting to those businesses that operate in China than those that simply purchase from China.
Last month, White House economic advisor Larry Kudlow told reporters tariffs on Chinese imports may not go away if and when the administration reaches a deal with China, and Mnuchin made no comment on the issue Wednesday.
On the same broadcast, Mnuchin said: "As soon as we’re ready and we have this done, [President Trump is] ready and willing to meet with President Xi and it’s important for the two leaders to meet and we’re hopeful we can do this quickly, but we’re not going to set an arbitrary deadline.”
Bloomberg's report of the changes to company ownership requirements in China represents one of the historically intractable issues between the parties, which could be a good sign for progress if the provision indeed ends up in the final deal. Mnuchin declined to lay out any specific "sticking points" in the negotiations. He said the deal was currently 150 pages with "multiple chapters."
