As negotiators work to flesh out the "Phase One" trade deal President Donald Trump and China's President Xi Jinping are expected to sign next month, trade hawk Peter Navarro has been fighting the deal behind the scenes, according to three people close to the talks.
Navarro has taken particular issue with the shelving of certain protections for intellectual property and technology that appeared in earlier versions of the deal, according to these three sources, who are in regular contact with Trump and the administration. Navarro has urged Trump to force China to recommit to previous promises on IP protection or walk away from a deal.
So far, Navarro's effort has been unsuccessful. "He's been agitating to drive a harder line" since the partial deal was announced, said one former administration official. "But he's alone on this one."
On Friday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin continued talks in a principal-level call with Chinese vice premier Liu He. "They made headway on specific issues and the two sides are close to finalizing some sections of the agreement," according to a readout provided by USTR. "Discussions will go on continuously at the deputy level, and the principals will have another call in the near future."
The deal in the works would see China increase its purchases of agricultural goods over a period of two years, remove barriers for financial services companies, and commit to greater transparency in its currency market. In return, the U.S. refrained from increasing tariffs on Oct. 15 and may cancel a forthcoming round of tariffs in December.
"They'd like to see some tariffs that are scheduled to go on very soon, they'd like to see them not go on," Trump said Friday of Beijing's agenda in the talks.
As announced, the deal would not outlaw China's subsidizing state-owned enterprises. It would not open China's economy to all sectors and industries, as the Trump administration had been pushing. And it would not require China to codify the deal into the law — a focal point in talks that became a dealbreaker for Xi in May.
Just days before Trump announced the Phase One deal, Navarro suggested on NPR's "Morning Edition" that such a partial deal was not a possibility.
"President Trump has steely resolve. It's either a big deal or no deal. That's been his posture from day one," Navarro said.
Asked for comment about his opposition to the Phase One deal, Navarro provided the below comment by e-mail to CNBC:
"This is just more hearsay fake news from anonymous fake sources intent on disrupting the negotiations. There are no people 'close to the talks' within any real information -- Ambassador Lighthizer runs the tightest ship in the D.C. Swamp and his folks aren't talking to the outside."
Navarro has recently come under fire for citing a fabricated source — "Ron Vara" — in his academic work after frequently chiding unidentified sources as "fake news."
In September, he told CNBC that reports about a potential White House push to restrict investment in Chinese companies — including delisting them from U.S. exchanges — was "fake news." A day later, White House officials met to discuss those same restrictions, a memo on which included references to Chinese companies trading on U.S. exchanges.
In 2018, Navarro declared a story by this reporter "fake news" on a pending executive order prioritizing American companies in government contracting. The executive order, released five months later, matched the story exactly.