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Bumps in Road to Trump's China Deal: Looming Prospects of Tariffs & US 'Veto-Proof' Hong Kong Bill

© AP Photo / Ahn Young-joonImages of Chinese President Xi Jinping and U.S. President Donald Trump
Images of Chinese President Xi Jinping and U.S. President Donald Trump - Sputnik International
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The cancellation of an APEC meeting in Chile due to unrest disrupted Trump's plans to ink a partial trade deal with China in mid-November, while a unanimous vote by the US Congress on the Hong Kong Human Rights Act may complicate matters further. Beijing-based author Thomas W. Pauken II has outlined his forecast for the deal.

Asian and European markets were shattered on 19 November by the reports of China's pessimistic mood about a "phase one" trade deal: citing an anonymous government source, CNBC reported that President Donald Trump's unwillingness to roll back tariffs was affecting Beijing's vision on trade talks.

On Wednesday, Trump's threat to raise tariffs on Chinese goods if the two economic powerhouses do not strike a deal in the near future sent Asian stocks even lower. The next tariff deadline to levy new import taxes is 15 December, and the White House is still scheduled to go ahead with it.

'Chinese are Prepared for the Worst Case Scenario'

"The roller coaster ride of US-China trade talks is getting tiresome and the related drama just don’t capture much public attention anymore, including from the Chinese. Many Chinese have already set very low expectations and they are prepared for the worst case scenario as well", says Beijing-based political commentator Thomas W. Pauken II, the author of US vs. China: From Trade War to Reciprocal Deal.

Commenting on the reported frustration among the Chinese with regard to Trump's hesitance to roll back tariffs, the author suggests that one "cannot finalise a US-China trade deal without both nations zeroing out tariffs and trade restrictions from both sides".

"The only way this can be accomplished is through phases", he notes foreseeing that after the signing of the "phase one" deal this process will continue on for many months and perhaps a few more years ahead.

Speaking to CNBC an executive from bond investment giant Pimco predicted that phase one could be finalised and inked in 2019, before Christmas. However, although one can expect that the phase one deal would be signed in the foreseeable future, phase two and phase three "remain distant", a Morgan Stanley strategist specified in an interview with the media outlet.

Although the exact date of striking the much- anticipated partial deal remains unclear, Beijing signals that it's "willing… to work together to properly settle areas of common concern and strive for a phase-one trade agreement", as Gao Feng, China’s Ministry of Commerce spokesman, stated on 21 November.

Washington's Hong Kong Bill May Exacerbate US-China Tensions

The uncertainty surrounding the signing of the bill has recently been exacerbated by the Hong Kong Human Rights and Democracy Act which was passed by the Senate and the House of Representatives on 19 and 20 November, respectively. The legislation was denounced by the Chinese officials as interference in the internal affairs of Hong Kong and the People's Republic in general.

The bill envisages imposing sanctions on those Chinese officials who, according to US lawmakers, commit human rights violations against Hong Kong protesters.

It would also require the US secretary of state to check at least once a year whether Hong Kong enjoys enough autonomy to "justify treatment under a particular law of the United States, or any provision thereof, different from that accorded the People’s Republic of China".

On Thursday, Beijing called upon Trump to veto the legislation: "If the US continues to make the wrong moves, China will be taking strong countermeasures for sure", said Chinese foreign ministry spokesman Geng Shuang.

However, Pauken explains that Trump "can’t veto the Hong Kong Human Rights Act, since it was passed unanimously by the US House and Senate".

"The vote shows its veto-proof on Capitol Hill. President Trump has to accept the bill and sign it", the author concludes.

Citing a person familiar with the trade talks Politico noted that the Hong Kong bill could become a barrier to the much-anticipated trade deal. For its part, Nikkei interpreted Trump's Friday statement as the president's apparent hesitance to ink the bill because the China deal is getting "very close".

"We have to stand with Hong Kong, but I’m also standing with President Xi [Jinping]", Trump said. "We have to see him work it out".
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