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War of words: Trump and Xi spar over trade ahead of Argentina meeting

The United States and China were preparing to hold high-level trade negotiations in Washington until an esca...

Posted: Nov 20, 2018 3:07 AM
Updated: Nov 20, 2018 3:07 AM

The United States and China were preparing to hold high-level trade negotiations in Washington until an escalating war of words between President Donald Trump and his Chinese counterpart Xi Jinping this weekend prompted Chinese negotiators to cancel their plans.

Now, Trump and Xi are heading for a showdown over trade at the upcoming G20 summit in Argentina, a month before US tariffs on imports are set to balloon to 25% on January 1.

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The collapse of preliminary meetings ahead of the G20 leaves the two leaders without the extensive staff-negotiated draft agreements typical of most international talks, and in part reflects Xi's conviction that after months of tit-for-tat tariff announcements, a deal can only be struck with Trump himself.

"The level of uncertainty is unprecedented," said Craig Allen, president of the US-China Business Council. "The probability of coming to, if you will, a clean, comprehensive agreement has declined considerably."

A delegation from Beijing, which had been due to arrive in the US after Thanksgiving, canceled plans on Sunday, a move first reported by the South China Morning Post and confirmed by CNN.

That move came after the Chinese delegation postponed a trip to Washington last week, according to Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce.

"They have continued to suspend the decision on whether or not to come, and therefore, the chances of Vice Premier Liu He coming are slim to none," Brilliant said.

The upcoming Argentina meeting is the only imminent opportunity for a direct encounter between Trump and Xi before the January 1 deadline.

"The stake are pretty high," Brilliant added. "There's still a big gap between the two sides. Now we'll see how much their personal relationship will come into play because the market wants another signal about where this relationship is going."

Spokespeople for the White House and Treasury Department did not respond to requests for comment from CNN.

Asked about the cancellation at a briefing on Monday, Chinese Foreign Ministry spokesman Geng Shuang said the economic teams of both countries remain in close contact following a phone conversation between Trump and Xi two weeks ago. He declined to provide any further details on any events tied to the upcoming G20 meeting.

Speaking to reporters on Monday, White House counselor Kellyanne Conway appeared to throw the ball into Beijing's court, echoing a position taken by others in the administration as well.

"On a trade deal, you never know," Conway said. "That's up to China, as well."

She added that Trump would move ahead with his threat to impose another round of tariffs on an additional $267 billion in goods if no agreement can be reached.

"I don't know why people don't take him seriously because he obviously went ahead and put the tariffs on and thinks that we should not have a $500 billion trade deficit with China," Conway said.

The tariffs, which are paid by American importers, are designed to shift pricing power to US producers on a wide array of goods and components, but have drawn complaints from small businesses worried that higher prices will dampen demand. It's also spurred concerns about renewed inflation, just as the Federal Reserve is set to raise interest rates in December.

Optimism flared last week after Commerce Secretary Wilbur Ross floated the possibility that negotiators would meet in Washington ahead of the leaders meeting. The proposed gathering came shortly after Treasury Secretary Steven Mnuchin and China's Liu spoke by phone in hopes of moving toward a deal.

China subsequently offered a list of 142 concessions that Trump described as "not acceptable" in comments from the White House on Friday.

Trump's comments were followed by a sour weekend during an Asian economic summit in the Pacific island nation of Papua New Guinea, where Vice President Mike Pence stood in for Trump.

The No. 2 US administration official warned Beijing that Trump wasn't in a rush to end the trade war he started earlier this year and was willing to "more than double" the tariffs it has already placed on $250 billion in Chinese goods. The United States "will not change course until China changes its ways," Pence said in his speech.

Xi once again denounced Washington's "winner-takes-all" trade strategy, calling on differences between the two countries to be ironed out "through consultation."

"History has shown that confrontation, whether in the form of a cold war, or a hot war, or a trade war, will produce no winners," Xi said in his speech at the Asia-Pacific Economic Cooperation summit in Port Moresby.

The APEC summit ended on Sunday without agreement on a joint statement over a paragraph on trade, breaking a 25-year tradition since leaders began attending the yearly meeting.

Peter O'Neill, the Pacific island nation's prime minister, blamed "two big giants in the room."

During negotiations on Saturday, four Chinese officials "barged in" to the office of the Papua New Guinea foreign minister in an attempt to influence the language in the draft final statement, a person with direct knowledge of the incident told CNN.

A spokesperson for the foreign minister, Rimbick Pato, said the office had denied Chinese delegates part of the negotiating team a requested meeting at the convention center earlier in the day ahead of the drafting of the statement.

"The meeting request was declined as Minister Pato wanted to maintain his position of impartiality as Chair of the APEC Ministerial Meeting, only interventions by Ministers would be permitted at that stage of the negotiation," Pato said. He declined to provide further comment.

Correction: An earlier version of this article misstated the name and ministry of the Chinese government official who commented at a briefing Monday.

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