Trump says China trade talks ‘back on track,’ new tariffs on hold

U.S. President Donald Trump and China's President Xi Jinping shake hands before their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque

By Roberta Rampton and Michael Martina

OSAKA (Reuters) – The United States and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.

China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table, Trump said. No deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant parts of an agreement.

The last major round of talks collapsed in May.

Financial markets, which have been rattled by the nearly year-long trade war, are likely to cheer the truce. Washington and Beijing have slapped tariffs on billions of dollars of each other’s imports, stoking fears of a wider global trade war. Those tariffs remain in place while negotiations resume.

“We’re right back on track,” Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping at a summit of leaders of the Group of 20 (G20) major economies in Osaka, Japan.

“We’re holding back on tariffs and they’re going to buy farm products,” Trump said, without giving details about the purchases.

Trump tweeted hours later that the meeting with Xi went “far better than expected.”

“The quality of the transaction is far more important to me than speed,” he tweeted. “I am in no hurry, but things look very good!”

The U.S. president had threatened to slap new levies on roughly $300 billion of additional Chinese goods, including popular consumer products if the meeting in Japan proved unsuccessful. Such a move would have extended existing tariffs to almost all Chinese imports into the United States.

In a lengthy statement on the two-way talks, China’s foreign ministry quoted Xi as telling Trump he hoped the United States could treat Chinese companies fairly.

“China is sincere about continuing negotiations with the United States … but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.

Trump offered an olive branch to Xi on Huawei Technologies Co [HWT.UL], the world’s biggest telecom network gear maker. The Trump administration has said the Chinese firm is too close to China’s government and poses a national security risk, and has lobbied U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure.

Trump’s Commerce Department has put Huawei on its “entity list,” effectively banning the company from buying parts and components from U.S. companies without U.S. government approval.

But Trump said on Saturday he did not think that was fair to U.S. suppliers, who were upset by the move. “We’re allowing that, because that wasn’t national security,” he said.

CHEERS FROM CHIP MAKERS

Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval.

China welcomed the step.

“If the U.S. does what it says, then of course, we welcome it,” said Wang Xiaolong, the Chinese foreign ministry’s envoy for G20 affairs.

U.S. microchip makers also applauded the move.

“We are encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president’s remarks on Huawei,” John Neuffer, president of the U.S. Semiconductor Association, said in a statement.

Republican U.S. Senator Marco Rubio, however, tweeted that any agreement to reverse the recent U.S. action against Huawei would be a “catastrophic mistake” and that legislation would be needed to put the restrictions back in place if that turned out to be the case.

Last month, Rubio and Democratic U.S. Senator Mark Warner urged Trump to not use Huawei as a bargaining chip for trade negotiations.

Huawei has come under mounting scrutiny for over a year, led by U.S. allegations that “back doors” in its routers, switches and other gear could allow China to spy on U.S. communications.

The company has denied its products pose a security threat. It declined to comment on the developments on Saturday.

The problems at Huawei have filtered across to the broader chip industry, with Broadcom Inc warning of a broad slowdown in demand and cutting its revenue forecast.

Trump said he and Xi did not discuss the extradition proceedings against Meng Wanzhou, Huawei’s chief financial officer, who was arrested in Canada in December on charges alleging she misled global banks about Huawei’s relationship with a company in Iran.

RELIEF AND SCEPTICISM

Scores of Asia specialists, including former U.S. diplomats and military officers, urged Trump to rethink policies that “treat China as an enemy,” warning that approach could hurt U.S. interests and the global economy, according to a draft open letter reviewed by Reuters on Saturday.

Investors, businesses and financial leaders have for months been warning that an intractable tit-for-tat tariff war between the United States and China could damage global supply chains and push the world economy over a cliff.

International Monetary Fund Managing Director Christine Lagarde on Saturday urged G20 policymakers to reduce tariffs and other obstacles to trade, warning that the global economy had hit a “rough patch” due to the trade conflict.

Although analysts cheered a resumption of talks between Washington and Beijing, some questioned whether the two sides would be able to build enough momentum to breach the divide and forge a lasting deal.

“Translating this truce into a durable easing of trade tensions is far from automatic … especially as what’s in play now extends well beyond economics to include delicate national security issues of both immediate- and longer-term nature,” said Mohamed El-Erian, chief economic adviser at Allianz.

The United States says China has been stealing American intellectual property for years, forces U.S. firms to share trade secrets as a condition for doing business in China, and subsidizes state-owned firms to dominate industries.

China has said the United States is making unreasonable demands and must also make concessions.

The negotiations hit an impasse in May after Washington accused Beijing of reneging on reform pledges made during months of talks. Trump raised tariffs to 25% from 10% on $200 billion of Chinese goods, and China retaliated by raising levies on a list of U.S. imports.

(Reporting by Roberta Rampton, Michael Martina and Chris Gallagher in Osaka; Additional reporting by Koh Gui Qing in New York, Ben Blanchard in Beijing and Leika Kihara in Osaka and Jennifer Ablan in New York; Writing by Linda Sieg, Malcolm Foster, Jeff Mason and Paul Simao; Editing by Clarence Fernandez, Himani Sarkar)

Trump and North Korea’s Kim predict success in high-stakes nuclear summit

U.S. President Donald Trump and North Korean leader Kim Jong Un shake hands before their one-on-one chat during the second U.S.-North Korea summit at the Metropole Hotel in Hanoi, Vietnam February 27, 2019. REUTERS/Leah Millis

By Soyoung Kim and Jeff Mason

HANOI (Reuters) – North Korean leader Kim Jong Un and U.S. President Donald Trump met in Vietnam on Wednesday for a second summit that the United States hopes will persuade North Korea to give up its nuclear weapons in exchange for promises of peace and development.

Kim and Trump shook hands and smiled briefly in front of a row of their national flags at the Metropole hotel in the Vietnamese capital, Hanoi, before heading to dinner together.

Trump told reporters he thought the talks would be very successful, and asked if he was “walking back” on denuclearization, said “no”.

At their historic first summit in Singapore last June, Trump and Kim pledged to work toward denuclearization and permanent peace on the Korean peninsula but little progress has been made.

Kim said they had overcome obstacles to hold their second summit and praised Trump for his “courageous decision” to begin a dialogue.

“Now that we’re meeting here again like this, I’m confident that there will be an excellent outcome that everyone welcomes, and I’ll do my best to make it happen,” Kim said.

Trump and Kim held a 20-minute, one-on-one chat before sitting down to dinner with U.S. Secretary of State Mike Pompeo Trump’s acting Chief of Staff Mick Mulvaney, Kim’s top envoy, Kim Yong Chol, and North Korean Foreign Minister Ri Yong Ho.

On Thursday, the two leaders will hold a series of meetings, the White House said. The venue has not been announced.

“We’re going to have a very busy day tomorrow,” said a smiling, relaxed-looking Trump, seated beside Kim at a round table with the other four officials and two interpreters.

“Our relationship is a very special relationship.”

Experts said the pair were at pains to show their relationship had improved since their first meeting, with their body language closely mirroring each other.

A child with stickers of the North Korean and Vietnamese flags on her face reacts at the Vietnam-North Korea Friendship kindergarten, founded by North Korean Government in Hanoi, ahead of the North Korea-U.S. summit in Hanoi, Vietnam February 27, 2019. REUTERS/Athit Perawongmetha

A child with stickers of the North Korean and Vietnamese flags on her face reacts at the Vietnam-North Korea Friendship kindergarten, founded by North Korean Government in Hanoi, ahead of the North Korea-U.S. summit in Hanoi, Vietnam February 27, 2019. REUTERS/Athit Perawongmetha

GOOD RELATIONS

Trump said late last year he and Kim “fell in love”, but whether the bonhomie can move them beyond summit pageantry to substantive progress on eliminating Pyongyang’s nuclear arsenal that threatens the United States is the question that will dominate the talks.

Trump and Kim’s Singapore summit, the first meeting between a sitting U.S. president and a North Korean leader, ended with great fanfare but little substance over how to dismantle North Korea’s nuclear weapons and ballistic missiles.

In the run-up to this summit, Trump has indicated a more flexible stance, saying he was in no rush to secure North Korea’s denuclearization. He repeated that on Wednesday, saying while some people believed the talks should be moving more quickly, he was satisfied.

He has also said he would be happy as long as North Korea, which has not tested a nuclear weapon or intercontinental ballistic missile since 2017, maintained that freeze.

Some critics have said Trump appeared to be wavering on a long-standing U.S. demand for complete and irreversible denuclearization by North Korea and risked squandering leverage if he gave away too much, too quickly.

Asked if he would declare a formal end to the Korean War, which North Korea has long called for, Trump said: “We’ll see.”

North and South Korea have been technically at war since their 1950-53 conflict, with the Americans backing the South, ended in a truce, not a treaty.

Evans Revere, a former U.S. negotiator with North Korea, said Trump was under pressure, given the criticism and other domestic problems, and Kim might try to use that.

“Kim may be tempted to push Trump even harder for concessions, knowing how much the president wants and needs that testing pause,” Revere said.

Students from Nguyen Du secondary school hold U.S. and Vietnam flags outside the Presidential Palace, as they wait for wait to greet U.S. President Donald Trump, in Hanoi, Vietnam, February 27, 2019. REUTERS/Leah Millis

Students from Nguyen Du secondary school hold U.S. and Vietnam flags outside the Presidential Palace, as they wait for wait to greet U.S. President Donald Trump, in Hanoi, Vietnam, February 27, 2019. REUTERS/Leah Millis

‘AWESOME’ POTENTIAL

U.S. intelligence officials have said there is no sign North Korea will ever give up its entire arsenal of nuclear weapons, which it sees as its guarantee of national security. Analysts say it won’t commit to significant disarmament unless punishing U.S.-led economic sanctions are eased.

The two sides have discussed specific and verifiable denuclearization measures, such as allowing inspectors to observe the dismantlement of North Korea’s Yongbyon nuclear reactor, U.S. and South Korean officials say.

U.S. concessions could include opening liaison offices or clearing the way for inter-Korean projects.

Despite little progress on his goal of ridding North Korea of its weapons programs, Trump appeared to be betting on his personal relationship with Kim, and the economic incentive after 70 years of hostility between their countries.

“Vietnam is thriving like few places on earth. North Korea would be the same, and very quickly, if it would denuclearize,” Trump said on Twitter ahead of the meeting.

“The potential is AWESOME, a great opportunity, like almost none other in history, for my friend Kim Jong Un. We will know fairly soon – Very Interesting!”

For Trump, a deal that eases the North Korean threat could hand him a big foreign-policy achievement in the midst of domestic troubles.

While he is in Hanoi, his former personal lawyer Michael Cohen is testifying before U.S. congressional committees, with the president’s business practices the main focus.

Cohen, in wide-ranging testimony he is due to deliver on Wednesday, refers to a comment Trump made to him about avoiding the U.S. military draft for the Vietnam War on medical grounds: “‘You think I’m stupid, I wasn’t going to Vietnam’,” Cohen cited Trump as saying.

“I find it ironic, President Trump, that you are in Vietnam right now,” Cohen said in a draft statement seen by Reuters.

Trump, responding to the statement on Twitter, said Cohen was lying to reduce his prison time. He declined to respond when a reporter asked him about Cohen later.

 

(Reporting by Soyoung Kim and Jeff Mason in HANOI; Additional reporting by Hyonhee Shin, James Pearson, Mai Nyugen, Ju-min Park, Khanh Vu, Josh Smith in HANOI, David Brunnstrom and Matt Spetalnick in WASHINGTON; Editing by Robert Birsel and Lincoln Feast)

French government offers sweeteners to head off fresh ‘yellow vest’ unrest

A French fireman extinguishes a burning car as youths and high school students protest against the French government's reform plan, in Nantes, France, December 6, 2018. REUTERS/Stephane Mahe

By Richard Lough and Marine Pennetier

PARIS (Reuters) – The French government hinted at more concessions to ‘yellow vest’ protesters on Thursday in a bid to head off another wave of violence in the capital over living costs and regain the initiative after weeks of civil unrest.

With protesters calling on social media for “Act IV” – a fourth weekend of protest – Prime Minister Edouard Philippe said 65,000 police would be drafted in to stop a repeat of last Saturday’s mayhem in Paris when rioters torched cars and looted shops off the famed Champs Elysees boulevard.

Philippe told the Senate he was open to new measures to help the lowest-paid workers. Finance Minister Bruno Le Maire said he was prepared to accelerate tax cuts for households and that he wanted workers’ bonuses to be tax-free.

“I am ready to look at all measures that will help raise the pay of those on the minimum wage without doing excessive damage to our competitiveness and businesses,” Philippe told the parliament’s upper house.

The rush of sweeteners to soothe public anger began with Philippe’s climb-down on fuel tax hikes, the first major U-turn of Emmanuel Macron’s presidency.

Yet, five days after the worst rioting central Paris has seen since 1968, all signs are that the government has failed to quell the revolt.

A repeat of last Saturday’s violence in Paris’s city center — which saw rioters deface the Arc de Triomphe with anti-Macron graffiti — would deal a blow to the economy and raise doubts over the government’s survival.

Philippe said the state would do all it could to maintain order. At least four first division football matches have been canceled and several museums including Paris’ Grand Palais said they would close.

ACT IV

An official in Macron’s office said intelligence suggested some protesters would come to the capital with the aim to “vandalize and kill”. There is concern about far-right, anarchist and anti-capitalist groups like the Black Bloc, which have piggybacked off the ‘yellow vest’ movement.

The Paris prefecture on Thursday told restaurants and luxury boutiques along the Champs Elysees boulevard to close on Saturday and asked local Paris authorities to prepare their districts for violence.

On Facebook and across social media, protesters are calling for “Act IV”.

“France is fed up!! We will be there in bigger numbers, stronger, standing up for French people. Meet in Paris on Dec. 8,” read one group’s banner.

Security sources said the government was considering using troops currently deployed on anti-terrorism patrols to protect public buildings.

The protests, named after the fluorescent safety jackets French motorists have to keep in their cars, erupted in November over the squeeze on household budgets caused by fuel taxes. Demonstrations swiftly grew into a broad, sometimes-violent rebellion against Macron, with no formal leader.

Their demands are diverse and include lower taxes, higher salaries, cheaper energy costs, better retirement provisions and even Macron’s resignation.

STREET POLITICS

Reversing course on next year’s fuel-tax hikes have left a gaping 4 billion euro hole in the government’s 2019 budget which it is now searching for ways to plug.

Citing unnamed sources, Les Echos business daily said the government as considering delaying corporate tax easing planned next year or putting off an increase in the minimum wage.

The unrest has exposed the deep-seated resentment among non-city dwellers that Macron is out-of-touch with the hard-pressed middle class and blue-collar workers. They see the 40-year-old former investment banker as closer to big business.

An Elabe poll on Thursday showed that only 23 percent of people trusted Macron, now lower than his predecessor Francois Hollande at the same period in his presidency.

Trouble is also brewing elsewhere for Macron. Teenage students on Thursday blocked access to more than 200 high schools across the country, burnt garbage bins and setting alight a car in the western city of Nantes. Hundreds of students were arrested after clashes with riot police.

Meanwhile, farmers who have long complained that retailers are squeezing their margins and are furious over a delay to the planned rise in minimum food prices, and truckers are threatening to strike from Sunday.

Le Maire said France was no longer spared from the wave of populism that has swept across Europe.

“It’s only that in France, it’s not manifesting itself at the ballot box, but in the streets.”

(Reporting by Richard Lough and Marine Pennetier; additional reporting by Leigh Thomas, Michel Rose, Emmanuel Jarry, John Irish and Myriam Rivet; Editing by Richard Balmforth)

Growing split in Seoul over North Korea threatens Korea detente, nuclear talks

South Korean President Moon Jae-in and North Korean leader Kim Jong Un shake hands at the truce village of Panmunjom inside the demilitarized zone separating the two Koreas, South Korea, April 27, 2018. Korea Summit Press Pool/Pool via Reuters/File Photo

By Hyonhee Shin

SEOUL (Reuters) – When Seoul was preparing to open a liaison office in the North Korean city of Kaesong this summer after a decade of virtually no contact with its longtime enemy, South Korean officials had heated debates over whether they should seek approval from Washington.

Some top aides to President Moon Jae-in stressed it was an issue for the two Koreas alone and there was no need to involve their U.S. ally, two people with knowledge of the situation told Reuters.

But to the surprise of several officials at the meeting, Unification Minister Cho Myoung-gyon argued Washington must be consulted because Seoul’s plans might run afoul of sanctions imposed on North Korea over its nuclear weapons program.

Two dozen countries including the Britain, Germany and Sweden already have embassies in Pyongyang, and other officials saw the proposed liaison office as a far lower-level of contact with the North.

And they certainly did not expect Cho to be a leading advocate of strict enforcement of sanctions. Cho was Moon’s personal choice to head the ministry, whose prime mission is to foster reconciliation, cooperation and eventual reunification with the North.

Cho, whose 30-year public service history has been inextricably linked to reunification, was even sacked from the ministry in 2008 over his “dovish” stance toward Pyongyang.

At the suggestion of Cho and senior diplomats, Seoul ultimately sought U.S. consent before opening the office in September, one of the sources said.

All the sources spoke to condition of anonymity due to sensitivity of the matter.

Cho declined to comment for this article, but a senior official at the Unification Ministry said it was aware of criticisms of Cho.

“Inter-Korean ties are unique in their nature, but it’s been difficult, and there’s North Korea’s duplicity. It’s a dilemma we face or our fate,” the official said, asking not to be named because of the sensitivity of the issue.

 

CHIEF NEGOTIATOR, OR ROADBLOCK?

The previously unreported debate among Moon’s top officials illustrates a growing divide within South Korea over how to progress relations with the North while keeping Washington on the side.

Some corners of the administration argue Seoul can’t afford to be seen veering from the U.S.-led sanctions and pressure campaign until Pyongyang gives up its nuclear weapons program, while others feel closer inter-Korean ties can help expedite the stalled diplomatic process, several officials close to the situation say.

“If the internal rift leads to moving too quickly with the North without sufficient U.S. consultations, it could pose a setback to not only the nuclear talks but also the alliance and inter-Korean relations,” said Shin Beom-chul, a senior fellow at the Asan Institute for Policy Studies in Seoul.

After the inter-Korean thaw gave way to reconciliation efforts between North Korean leader Kim Jong Un and U.S. President Donald Trump earlier this year, Trump asked Moon to be “chief negotiator” between the two.

That task has become increasingly difficult as Washington and Pyongyang blame each other for the faltering nuclear talks.

U.S. officials insist punishing sanctions must remain until North Korea completely denuclearises. North Korea says it has already made concessions by dismantling key facilities and Washington must reciprocate by easing sanctions and declaring an end to the 1950-53 Korean War.

“Unlike other advisers, Minister Cho has balanced his staunch desire for peace with an understanding of the importance of retaining a strong South Korea-U.S. alignment,” said Patrick Cronin of the Centre for a New American Security, an Asia expert in close touch with both U.S. and South Korean officials.

“Some alliance discord is inevitable and not worrisome. What would be worrisome would be a clear rupture in South Korea-U.S. approaches for managing North Korea.”

The presidential Blue House declined to comment, but Moon told reporters on Monday the view that there was discord between South Korea and the United States was “groundless” because there is no difference in the two countries’ positions on the North’s denuclearization.

SLOW PROGRESS, MOUNTING FRUSTRATION

A third source familiar with the presidential office’s thinking said there was mounting frustration with Cho within the Blue House and even inside the Unification Ministry amid concerns he worried too much about U.S. views.

“What the president would want from him as the unification minister is to come up with bold ideas to make his pet initiatives happen,” the source said.

During three summits this year, Moon and Kim agreed to re-link railways and roads, and when conditions are met, restart the joint factory park in Kaesong and tours to the North’s Mount Kumgang resort that have been suspended for years.

None of those plans have made much headway, either because sanctions ban them outright, or as in the case of Kaesong, Seoul took time to convince skeptical U.S. officials that cross-border projects wouldn’t undermine sanctions.

North Korea itself has been an unpredictable partner. Discussions through the Kaesong office have been few and far between, with Pyongyang’s negotiators often failing to show up for scheduled weekly meetings without notice, Unification Ministry officials say.

Even so, the Kaesong move has caused tensions with Washington.

U.S. officials told Seoul that South Korea’s explanations on the Kaesong office were not “satisfactory,” the South’s Foreign Minister Kang Kyung-wha told a parliamentary hearing in August.

Washington was also caught off guard when a group of businessmen who used to operate factories in the now-closed Kaesong industrial park were invited for the opening ceremony of the office, a diplomatic source in Seoul said.

The allies launched a working group last month led by their nuclear envoys to coordinate North Korean policy. It was borne out of U.S. desire to “keep inter-Korean relations in check,” the source said.

Asked about the Kaesong office, a U.S. State Department official said: “We expect all member states to fully implement U.N. sanctions, including sectoral goods banned under UN Security Council resolution, and expect all nations to take their responsibilities seriously to help end (North Korea’s) illegal nuclear and missile programs.”

Another State official said the United States endorsed April’s inter-Korean summit agreement during its own summit with North Korea “because progress on inter-Korean relations must happen in lockstep with progress on denuclearization.”

Last month, Secretary of State Mike Pompeo met Cho in Washington, bluntly warning him that inter-Korean cooperation and progress on nuclear negotiations should “remain aligned.”

FILE PHOTO: South Korean Unification Minister Cho Myoung-gyon walks to board a plane to leave for Pyongyang, North Korea, to participate in the inter-Korean basketball matches, at Seoul Airport in Seongnam, South Korea, July 3, 2018. Ahn Young-joon/Pool via REUTERS/File Photo

FILE PHOTO: South Korean Unification Minister Cho Myoung-gyon walks to board a plane to leave for Pyongyang, North Korea, to participate in the inter-Korean basketball matches, at Seoul Airport in Seongnam, South Korea, July 3, 2018. Ahn Young-joon/Pool via REUTERS/File Photo

ROCK AND A HARD PLACE

Even as he faced pressure from Washington to hold a tough line, Cho was being criticized for dragging his feet on reconciliation.

In May, the North called off planned talks with the South led by Cho in protest against U.S.-South Korean air combat exercises. When the meeting eventually took place, Cho’s counterpart, Ri Son Gwon, openly blamed Cho for having caused a “grave situation” that resulted in the cancellation of the talks.

At the Kaesong office opening, factory owners pressed Cho to reopen the complex and said they were dismayed at the Unification Ministry for repeatedly rejecting requests to visit the border city to check on equipment and facilities idled since the 2016 shutdown.

“We’ve expressed, directly and indirectly, our complaint that the minister may be too lukewarm about our requests, even though allowing the trip has nothing to do with sanctions,” said Shin Han-yong, who chairs a group of businessmen with plants in Kaesong.

Cho recently told the parliament the delays are due to scheduling issues with the North, adding the ministry “needs more time to explain the overall circumstances” to the international community.

Shin, the expert at Asan, warned any move to undermine sanctions may expose South Korean companies to risks of punishment.

After Moon and Kim’s summit in Pyongyang in September, a senior U.S. Treasury official called compliance officers at seven South Korean banks to warn them that resuming financial cooperation with North Korea “does not align with U.S. policies” and the banks must comply with U.N. and U.S. financial sanctions, according to a South Korean regulatory document.

“Realistically we have no option but to consider U.S. positions, as the top priority is the North’s denuclearization and the United States has the biggest leverage on that,” said Kim Hyung-suk, who served as vice unification minister until last year.

“Without progress on the nuclear issues, there would be constraints at some point in sustaining inter-Korean ties. And Minister Cho knows that.”

(Editing by Soyoung Kim and Lincoln Feast.)