The US and China agree to a ceasefire in their trade war

BUENOS AIRES, Dec 1 (Reuters) - China and the United States agreed this Saturday to a ceasefire in their trade war after a high-level meeting in Argentina between US President Donald Trump and Chinese President Xi Jinping, including the decision not to increase tariffs on January 1.

Trump will leave tariffs on $200 billion worth of Chinese imports at a rate of 10% and agreed not to raise them to 25% "at this time," the White House said in a statement.

"China will agree to purchase an as yet undetermined, but very significant, amount of agricultural, energy, industrial and other products from the United States to reduce the trade imbalance between our two countries. China has agreed to begin purchasing agricultural products from our farmers immediately" , he added.

The two leaders also agreed to immediately begin talks on structural changes in forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and theft, services and agriculture, the White House said.

Both countries agreed that they will try to get this "transaction" completed in the next 90 days, but if that doesn't happen, the 10% tariffs will rise to 25%.

The Chinese government's top diplomat, State Councilor Wang Yi, said the negotiations were held in a "friendly and candid atmosphere."

"The presidents agreed that the two sides can and should achieve proper bilateral relations," Wang told reporters, adding that they agreed to further exchanges at appropriate times.

"The discussion on economic and trade issues was very positive and constructive. The two heads of state reached a consensus to stop the mutual increase of new tariffs," Wang said.

The two sides will "intensify negotiations" toward the complete elimination of all additional tariffs, Wang said.

"China is willing to increase imports according to the needs of its domestic market and the needs of the people, including tradable products from the United States, to gradually ease the imbalance in bilateral trade," the counselor added.

"The two sides agreed to mutually open their markets, and as China moves forward with a new round of reforms, the legitimate concerns of the United States can be progressively resolved."

The announcements came after Trump and Xi met aides at a working dinner at the end of a two-day meeting of world leaders in Buenos Aires, in their attempts to defuse a dispute that has unnerved global financial markets and affected the world economy.

After the two-and-a-half-hour meeting, White House chief economist Larry Kudlow told reporters that the talks went "very well," but offered no details as he boarded Air Force One and headed to Washington with Trump.

China's goal was to persuade Trump to abandon plans to raise tariffs on $200 billion in Chinese goods to 25% in January, from the current 10% rate. Trump had threatened to do that, and possibly add tariffs on $267 billion in imports, if there was no progress in talks.

With the United States and China in conflict over trade, financial markets will move to the outcome of the talks, seen as the most important meeting of U.S. and Chinese leaders in years.

The meeting came shortly after the Group of 20 largest economies in the world backed a review of the World Trade Organization (WTO), which regulates international trade disputes, marking a victory for Trump, a staunch critic of the organization.

Trump told Xi at the beginning of their meeting that he hoped they would achieve "something big" on trade for both countries. It was a positive sign when he sat across from Xi, despite the US president's previous threats to impose new tariffs on Chinese imports by next year at the latest.

He suggested that the "incredible relationship" he and Xi had established would be "the main reason" they could make progress on trade.

Xi told Trump that only through cooperation could the United States and China serve the interest of peace and prosperity. Washington and Beijing have also been increasingly at odds over security in the Asia-Pacific region.

At the same time, Trump again raised concerns with Xi about the shipment of the synthetic opioid fentanyl from China to the United States, urging the Chinese leader to place it in a "restricted category" of drugs that would criminalize it.

The White House said Xi, "in a wonderful humanitarian gesture," had agreed to designate fentanyl as a controlled substance.

Xi also said he was willing to approve the previously unapproved Qualcomm-NXP deal should it be presented to him again, the White House added.

"This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is a great honor to work with President Xi," Trump said in the statement.

Reforms to the WTO

Earlier on Saturday, leaders of the world's major economies called for reform of the WTO in their final summit statement.

Officials expressed relief that an agreement on the statement was reached after negotiators worked through the night to overcome differences over language around climate change.

The final text recognized trade as an important driver of global growth, but made only a passing reference to "current trade problems" after the US delegation managed to keep any mention of protectionism out of the declaration.

Trump has criticized China's trade surplus with the United States, and Washington accuses Beijing of not playing fair on trade. China considers the United States protectionist and has resisted what it sees as attempts at intimidation.

The two countries are also at odds over China's extensive claims in the South China Sea and the movements of American warships through the highly volatile Taiwan Strait.

In addition to tariffs on Chinese products, Trump this year imposed tariffs on steel and aluminum imports into the United States. Several countries have filed litigation with the WTO to challenge the levies.

The United States is unhappy that the WTO has not held China accountable for not opening its economy as expected when it joined the body in 2001. The European Union is also pushing for sweeping changes to how the organization works. WTO.

The cost of consensus

G20 delegates said negotiations on the summit declaration flowed more smoothly than at a meeting of Asia Pacific leaders two weeks ago, where disagreement over protectionism and unfair trade practices prevented a consensus.

European officials said a reference to refugees and migration, a sensitive issue for the Trump administration, was removed to ensure consensus.

Regarding climate change, the United States once again marked its differences with the rest of the G20 by reiterating in the declaration its decision to withdraw from the Paris Agreement and its commitment to using all types of energy sources.

The other members of the group reaffirmed their commitment to implementing the Paris agreement and addressing climate change.

International Monetary Fund (IMF) Managing Director Christine Lagarde said the high levels of debt accumulated by emerging market nations was a concern.

US officials said G20 leaders' call for the IMF and World Bank to improve monitoring of debt levels was aimed at ensuring developing economies were not heavily indebted to China for infrastructure projects.

Argentina, host of the G-20 summit, is expected to sign a series of agreements with China on Sunday during a one-day state visit by Xi.

In addition to trade and climate change, Russia's seizure of Ukrainian ships drew condemnation from other G-20 members, while Saudi Crown Prince Mohammed bin Salman's presence at the summit posed an uncomfortable dilemma for leaders.

The de facto ruler of Saudi Arabia arrived amid controversy over the murder of Saudi journalist Jamal Khashoggi, although Saudi officials said the prince had no prior knowledge of the murder.

(Additional reporting by Nicolás Misculin, Maximilian Heath, Scott Squires, Cassandra Garrison, Gabriel Burin, Michael Martina and Kylie Maclellan in Buenos Aires. Edited in Spanish by Pablo Garibian)