Chile's APEC cancellation creates hurdle for U.S.-China trade deal

Chinese and U.S. flags flutter near The Bund in Shanghai · Reuters

By Andrea Shalal, Steve Holland and Lusha Zhang

WASHINGTON/BEIJING/SINGAPORE (Reuters) - Leaders from the United States and China encountered a new obstacle in their struggle to end a damaging trade war on Wednesday, when the summit where they were supposed to meet was canceled because of violent protests.

U.S. President Donald Trump said this week he hoped to sign an interim trade deal with Chinese counterpart Xi Jinping during the Nov. 16-17 Asia-Pacific Economic Cooperation summit in Chile. Chilean officials said they canceled the summit to focus on restoring law and order in the country.

The White House said afterwards the United States still expects to sign an initial trade agreement with China next month, but no alternate location had yet been set for Xi and Trump to meet.

"We look forward to finalizing Phase One of the historic trade deal with China within the same time frame," the White House said in a statement that omitted a mention of the president or his planned meeting with Xi.

China's commerce ministry said in a statement on Thursday the bilateral talks will continue to proceed as previously planned and the lead trade negotiators from both countries will speak by telephone on Friday.

China's foreign ministry spokesman Geng Shuang also said during a daily briefing on Thursday that Trump and Xi have maintained contact through various means, without elaborating.

U.S. and Chinese negotiators have been racing to finalize a text of the "phase one" agreement for Trump and Xi to sign next month, a process clouded by wrangling over U.S. demands for a timetable of Chinese purchases of U.S. farm products.

Treasury Secretary Steven Mnuchin, who was traveling in the Middle East, told Reuters on Wednesday that U.S. discussions with China had been productive, and work on finalizing the text of the deal was continuing. China's commerce ministry also said on Thursday the negotiations were progressing well.

The White House intends to offer some U.S. locations as alternatives for the APEC summit, according to one source familiar with U.S. thinking. Alaska and Hawaii could be potential options that would be acceptable to China, said a second source familiar with the issue.

China has also suggested Macau as a possible venue, according to one China trade source familiar with the issue.

"LOTS OF OPTIONS"

The White House had no immediate comment on alternative locations, and the Chinese commerce ministry's statement on Thursday did not address whether Trump and Xi would still meet next month. But trade experts said arranging another summit at short notice would be tough.