WASHINGTON — Treasury Secretary Steven Mnuchin said on Saturday that he believed the United States and China were nearing the final stage of trade negotiations, moving closer to what he said would be the biggest change in the economic relationship between the countries in 40 years.
Mnuchin’s note of optimism comes as the world’s two largest economies are racing to end a protracted trade dispute that has resulted in damaging tariffs and business uncertainty and provided a drag on the global economy.
“We’re hopeful that we’re getting close to the final round of concluding issues,” he told reporters on the sidelines of the spring meetings of the International Monetary Fund and World Bank.
Mnuchin again repeated his claim that the biggest obstacle to a trade deal — how to enforce the agreement — is nearly settled. The United States has been pushing China to agree to a mechanism that would allow Washington to impose tariffs on Chinese goods if Beijing reneges on certain parts of the deal.
On Saturday, Mnuchin said the United States and China would both have the authority to enforce commitments that are agreed to, indicating the ability for Beijing to exert some control in the future as well.
“We’ve already agreed there’s a big component of this that there will be real enforcement on both sides,” he said, “including a detailed enforcement office on both sides with significant resources.”
At a congressional hearing in February, Robert E. Lighthizer, President Donald Trump’s top trade negotiator, described a complex enforcement mechanism under discussion that aimed to ensure China would live up to its promises.
Lighthizer said at the time that China had agreed to regular meetings at the levels of office director, vice minister and minister that would allow the United States to keep tabs on China’s behavior and air complaints from companies about unfair business practices. If China did not keep its promises, the United States would respond “proportionally but unilaterally.” The implication was that the United States would respond with tariffs.
American officials have also been pressing China to agree not to retaliate against the United States if it reimposes tariffs on Chinese goods. China has been reluctant to agree to a one-sided enforcement mechanism, viewing it as infringing on its sovereignty and giving Washington too much power over its economy.
“If complaints are real, we may have to use tariffs to deal with them, and we’re asking the Chinese not to retaliate,” Larry Kudlow, the director of the National Economic Council, told the Fox Business Network in March when discussing enforcement of a deal.
People who have been closely tracking the talks cautioned that enforcement continued to be an obstacle that remained unsettled because China and the United States had not agreed on the specifics of penalties.