US-China trade war: Liu He, Robert Lighthizer and Steven Mnuchin hold phone call on core concerns over phase one deal

Wendy Wu

Top trade negotiators from China and the United States held a telephone conversation on Tuesday morning, discussing their core concerns and agreeing to maintain communication on a potential interim trade agreement, China’s Ministry of Commerce said.

Vice-Premier Liu He, China’s lead negotiator in the trade talks, and US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, “discussed how to address respective core concerns, reached consensus on solving related problems, and agreed to keep communication for the remaining matters in the ‘phase one’ trade negotiations”, the ministry said in a statement.

Liu had last talked to his US counterparts 10 days earlier, when they had “constructive discussions” on core issues, according to China’s official media reports.

Global Times, a nationalist tabloid published under the auspices of Communist Party mouthpiece People’s Daily, reported on Monday that the two countries were “moving closer” to agreement on a phase one trade deal. Among the details being discussed was the issue of removal of tariffs.

The latest phone call took place a day after China summoned Terry Branstad, the US ambassador to Beijing, to protest about the passage through the US Congress of the Hong Kong Human Rights and Democracy Act – China’s third such move in less than a week.

Chinese Foreign Vice-Minister Zheng Zeguang “lodged solemn representations” with Branstad over the advancement of the US legislation, the foreign ministry said in a statement earlier on Tuesday.

US-China trade negotiators in ‘constructive’ phone call

“China strongly urges the United States to grasp the situation, immediately correct its mistake, prevent the act from becoming law and stop any words and deeds that interfere in Hong Kong affairs and China’s other internal affairs,” Zheng was quoted as saying. “Otherwise, the United States has to bear all the consequences that arise.”

The passage of the US’ Hong Kong act raised the possibility that China could retaliate by taking a more hardline stance in the trade talks. However, the phone call on Tuesday suggested that Beijing was keeping the trade negotiations largely separate from its other disputes with Washington.

Chinese President Xi Jinping said last Friday in Beijing that China wanted to reach an interim trade deal with the US but would not shy away from retaliation if necessary.

Speaking to a group of delegates and invited journalists at a business forum, Xi said: “We want to work for a phase one agreement on the basis of mutual respect and equality.”

The summoning of Branstad occurred after a landslide victory by Hong Kong’s pan-democrats in district council elections that were seen as a strong rebuke of the city’s embattled leader, Carrie Lam Cheng Yuet-ngor.

It was the first time Branstad had been summoned to the foreign ministry in relation to disputes over Hong Kong, and came days after China separately summoned William Klein, the US embassy’s minister counsellor for political affairs in Beijing, and consul general Hanscom Smith, the US’ top envoy to Hong Kong – also to lodge complaints over the democracy act and warn of unspecified consequences.

The previous time China had summoned Branstad to lodge a diplomatic protest was last December, when he was called to the foreign ministry over the arrest of Huawei executive Meng Wanzhou in Canada for alleged violations of US sanctions on Iran.

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