China and US agree on trade enforcement mechanism, says Mnuchin

US Treasury secretary Steven Mnuchin said on Wednesday evening that China and the US have agreed to set up trade enforcement offices in both countries in order to monitor compliance with any trade deal, suggesting that an end to their trade war is close.

Mnuchin confirmed the agreement on enforcement, which is understood to have been one of the most difficult impasses in negotiations, in an interview with CNBC and said it was the result of negotiations by phone between US representatives and Liu He, China's vice premier.

"We’ve pretty much agreed on an enforcement mechanism," Mnuchin told CNBC. "We’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters. This is something both sides are taking very seriously."

US trade representative Robert Lighthizer said in February that any enforcement mechanism would involve officials from both nations meeting to discuss issues, but the promise of enforcement offices appears to be a more comprehensive compliance measure.

Joshua Mahony, senior market analyst at IG, said: "With the bulk of the trade negotiations across the line, the focus has been on those final issues, such as the protection of intellectual property, and quite how the deal would be enforced. With both sides planning to set up enforcement offices to ensure that the terms are adhered to, negotiations are clearly moving closer to a breakthrough that could provide a substantial boost for markets and the Yuan."

Perhaps the most important issue that remains to be resolved in negotiations is that of existing US tariffs on Chinese goods, which Beijing wants lifted immediately upon signing any deal, while Washington favours a phased withdrawal in order to increase the chances of any deal being fully adhered to.

China has also reportedly offered to open its cloud computing sector to foreign companies, who are currently required to enter a join-venture with a Chinese firm in order to enter the market.