WASHINGTON—U.S. trade officials are looking to knock down speculation of a split on China policy between President Trump and his lead trade negotiator, Robert Lighthizer, following a testy exchange between the two in the Oval Office Friday.
The incident occurred in front of reporters Friday afternoon, as the president and cabinet officials met with China’s top trade envoy, Vice Premier Liu He, to announce that talks aimed at settling the U.S.-China trade dispute were making progress and would be extended through the weekend.
Mr. Trump appeared to upbraid Mr. Lighthizer, who said he was negotiating memorandums of understanding with China. The MOUs cover a half-dozen subjects including agriculture, currency policy and technology transfer.
“An MOU is a contract,” Mr. Lighthizer said, turning to reporters. “A memorandum of understanding is a binding agreement between two people. And that’s what we’re talking about.”
That provoked what many saw as a rebuke from the president.
“The real question is, Bob, so we do a memorandum of understanding, which, frankly, you could do or not do. I don’t care if you do it or not. To me, it doesn’t mean very much. But if you do a memorandum of—how long will it take to put that into a final, binding contract?” the president said.
Mr. Lighthizer responded quickly that he would call any agreement with China a “trade agreement,” not an MOU. “We’ll never use the term again,” Mr. Lighthizer said.
The dispute was less significant than it appeared, according to people familiar with the discussions, and mainly involved a disagreement over terminology.
Mr. Trump was trying to make clear that he wasn’t interested in a short-term agreement; rather, he wanted a longer-term deal, these people said. Mr. Trump’s understanding of an MOU comes from his experience in real estate, where an MOU is preliminary to a deal, they said.
Mr. Lighthizer, said the individuals, was using MOU as a trade-deal term, meant to indicate that a deal wouldn’t require Congressional approval. One of the individuals said that the MOUs in draft form are very detailed and could total 100 pages.
U.S. negotiators are cognizant of the need to present a unified front as trade talks reach a crucial stage. Mr. Lighthizer, a skilled bureaucratic infighter, also is aware of the need to keep on the good side of his volatile boss. At various times, Mr. Trump has sidelined Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross in China policy.
“The talks with China are still ongoing,” said a senior official in the USTR’s office. “Thanks to President Trump’s strong leadership, we are making strong progress on substantive, structural issues.”
If the two sides don’t reach a deal by March 1, tariffs on $200 billion in Chinese goods are set to rise to 25% from 10% at 12:01 a.m., the following day. Mr. Trump indicated on Friday that he is inclined to extend the deadline as long as talks are progressing, with an eye toward closing a deal in a summit with Chinese President Xi Jinping at his Mar-a-Lago estate in Florida later in March.
Some U.S. officials are worried that Mr. Trump is so focused on a deal that could help boost markets that he wouldn’t fight hard for so-called structural issues, including Beijing’s pressure on U.S. companies to transfer technology to their Chinese partners, illicit subsidies for domestic firms and changes in regulations and laws needed to enforce intellectual property.
In recent remarks, Mr. Trump has focused far more on potential Chinese purchases of soybeans and other commodities than on structural issues.
Until last fall, Mr. Trump had regularly sided with Mr. Lighthizer over Mr. Mnuchin in deciding to impose tariffs on China and to focus on structural issues. But when the stock market swooned amid trade jitters late last year, Mr. Trump stepped up pressure on his deputies to reach an accord with Beijing.
Negotiations continued Saturday and are expected to wrap up on Sunday. One individual familiar with the discussions said that USTR continues to press Chinese counterparts for important structural changes.
That includes getting Beijing to allow U.S. cloud-computing companies to operate in China on the same terms as Chinese ones. Now, U.S. cloud-computing companies must sell their technology to Chinese firms, which pay licensing fees to the U.S. companies. U.S. cloud-computing companies, including
can’t offer their own services in China.
Beijing has long considered cloud-computing issues off limits, arguing they were issues of national security. A senior administration official said a few weeks ago that China had agreed to add more subjects to the negotiations.
Write to Bob Davis at [email protected]