China's plans to bring a massive delegation to Washington, DC for trade talks starting Wednesday -- the eleventh round of face-to-face talks between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He - has hit a snag, FOX Business has learned.
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Following President Trump's Tweet Sunday, threatening a hike in tariffs by Friday, the delegation is now in a holding pattern. Liu, along with many others, did not get on a plane to the U.S.
"We are also learning about the situation. What I can tell you is that the Chinese team is preparing to visit the United States for talks" said a spokesperson for the Chinese Foreign Ministry Geng Shuang on Monday.
As previously reported, the Chinese were set to bring about 100 people to the talks this week. The group will consist of department heads from every enforcement agency in the Chinese government, according to Chinese trade sources.
The Chinese are trying to show they are serious by having each department head verify, in person, to Lighthizer that they will enforce the agreement if the U.S. and China come to a deal, the sources said. Lighthizer previously said during March testimony in front of the Senate Finance Committee that the Chinese have failed to follow through on about every deal they have ever made with the U.S.
The U.S. Trade Representative adds that any agreement with China will have a heavy enforcement component attached to it.
Trade sources told FOX Business the enforcement will be tiered: There will be a series of meeting to settle disputes, and the first meetings will be monthly with the staff from the U.S. Trade Representative’s Office and its counterparts in the Chinese Ministry of Commerce.
If a dispute could not be settled, it would be kicked up a quarterly meeting at the deputy level. If the dispute still could not be settled, Lighthizer said it would be sorted out at the minister level during semi-annual meetings between the U.S. trade representative and the Chinese vice premier.
The Chinese are very happy with the plan to use tariffs as a way to make sure Beijing follows through with the agreement. Those sources say under the plan being considered, the tariffs would roll off of China as the Chinese meet certain benchmarks enacting the agreement.
China has already passed a new foreign investment law that will take effect Jan. 1, 2020. The law bars government agencies and employees from demanding intellectual property of companies, although the Chinese have not laid out exactly how that law will be enforced.
Enforcement of this new law will fall to some of the people the Chinese are bringing in the delegation to Washington next week, according to the sources. They plan to tell Lighthizer how that will be enforced, along with other proposed provisions in an agreement.
Intellectual property theft is a major concern for members of the Business Roundtable, which is made up of companies that employ 15 million people in the United States. According to the National Bureau of Asian Research President Richard Ellings, the theft of U.S. intellectual property, mostly by the Chinese, costs the U.S. an estimated $225 billion to $600 billion a year.
If the talks are still on, the Chinese want to make an impression and the large delegation is one way they hope to come to an agreement with the U.S., the sources said.