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Here's What the US Demanded of China at the Start of Trade Talks

Eight key points include a demand that China cut the two nations’ trade deficit by at least $200 billion by the end of 2020.

In a document entitled “Balancing the Trade Relationship,” the U.S. government made a series of demands from China at the outset of meetings in Beijing this week to resolve a simmering trade dispute between the world’s two biggest economies.

The document, seen by Bloomberg News, is divided into eight sections, ranging from trade-deficit reduction to tariff barriers to implementation. Here’s a synopsis of its key points:

Trade Deficit Reduction:

The U.S. wants China to cut the two nations’ trade deficit by at least $200 billion by the end of 2020 from 2018 levels. Chinese purchases of U.S. goods will represent at least 75% of a commitment to a $100 billion increase in purchases of U.S. exports for the 12 months beginning June 1, 2018, and at least 50% of China’s commitment to an additional $100 billion increase in purchases of U.S. exports in the 12 months beginning June 1, 2019.

Protection of American Technology and Intellectual Property

China to immediately cease providing subsidies and government support that fuels excess capacity in industries targeted by the Made in China 2025 plan. Specific policies and practices linked to technology transfer are eliminated. A cessation of government-sponsored cyber intrusion and cyber theft. Strengthened intellectual property rights protection and enforcement. By Jan. 1, 2019, China will eliminate provisions of the Regulations on the Administration of the Import and Export of Technologies and the Regulations on the Implementation of the Law on Chinese-Foreign Equity Joint Ventures identified in the U.S. By July 1, 2018, China will withdraw its request for WTO consultations in United States – Tariff Measures on Certain Goods from China and take no further action on the matter. The document also calls on China to take no retaliatory action in response to actions taken or to be taken by the U.S.

Restrictions on Investment in Sensitive Technology

A demand that China does not “oppose, challenge, or otherwise retaliate against the United States’ imposition of restrictions on investments from China in sensitive U.S. technology sectors or sectors critical to U.S. national security.”

U.S. Investment in China

A demand that China does not distort trade through investment restrictions and any restrictions are narrow and transparent U.S. investors in China to receive “fair, effective and non-discriminatory market access and treatment, including removal of the application of foreign investment restrictions and foreign ownership/shareholding requirements.” China to issue an improved nationwide negative list for foreign investment by July 1, 2018. Within 90 days the U.S. will identify existing investment restrictions that deny U.S. investors market access. China is then to remove all identified investment restrictions on a timetable to be decided by both nations.

Tariff and Non-tariff Barriers

By July 1, 2020, China will reduce tariffs on all products in non-critical sectors to levels that are no higher than the levels of the U.S.’ corresponding tariffs China to remove specified non-tariff barriers and recognizes that the U.S. may impose import restrictions and tariffs on products in critical sectors, including sectors identified in the Made in China 2025 industrial plan.

U.S. Services and Services Suppliers

A demand for China to improve market access in specified ways

U.S. Agricultural Products

A demand for China to improve market access in specified ways

Implementation

Both countries to meet quarterly to review targets and reforms If the U.S. declares China is not complying with the framework, the U.S. can impose tariffs or other restrictions on Chinese products or restrict supply of services A demand that China does not “oppose, challenge or take any form of action against the United States’ imposition of additional tariffs or restrictions.” China to withdraw its WTO complaints regarding designations of China as a non-market economy and will refrain from future challenges Within 15 days of receiving written notice of a prohibited product that may have been transshipped through one or more countries, China will provide full details of every shipment. Failure to do so will trigger tariffs. If China fails to uphold commitments the U.S. will impose tariffs on imports from China and will confiscate counterfeit and pirated goods or levy tariffs to compensate for lost technologies and intellectual property. A demand that China does not take any retaliatory action in response.

By Enda Curran and Keith Zhai

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