MNI SOURCES: China Requests Trade Talks Extension

By Iris Ouyang

     BEIJING(MNI) - China has requested an extension of trade talks with the

U.S. beyond a March 1 deadline, with the intention of finalizing a deal later at

a meeting between presidents Xi Jinping and Donald Trump, a source briefed by

both governments on progress of negotiations told MNI Thursday.

     The source, who requested anonymity, claimed not have heard about a 60-day

extension which Bloomberg reported to have been proposed by the U.S. side.

     Officials have not yet discussed specific language for a draft agreement,

the source told MNI. But both sides are moving towards making concessions, with

the U.S. government realizing it will be unable to obtain all it wants in the

current 90-day negotiation period while China has shown willingness to further

accelerate the process of opening up its markets and to increase purchases of

U.S. goods and services.

     The source noted Trump has been advised by U.S. officials not to come to

China to meet with Xi in case this jeopardises what the U.S. perceives as a

negotiating advantage. But China wants to proceed to direct talks with Trump,

for fear that he might otherwise overturn agreements reached between the

negotiators.

     The Chinese government has offered to open up its financial sector more

quickly, especially for life insurance companies. But the U.S. government is

pushing China to further reduce requirements for joint ventures and to

accelerate licensing processes for foreign financial service companies.

     This week's negotiations have been "difficult," with much of the discussion

centring on a verification and penalty mechanism the U.S. wants to put in place

to ensure China's full implementation of a deal.

     U.S. negotiators led by Trade Representative Robert Lighthizer proposed

several mechanisms which include timelines, specific deliverables, and penalties

if China does not hit certain milestones, the source said.

     China does not like the proposals, which it considers to impinge on its

sovereignty. The Chinese are also concerned that responsibility for the

compliance mechanism would be split between different U.S. government

departments, which they fear could lead to inefficiency.

     One proposal would be for the U.S. to immediately remove tariffs on $250

billion of Chinese goods, on the understanding that non-compliance would bring

them back and even raise them. Another proposal would be to keep all the tariffs

in place and remove them if China makes specific progress.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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