ASPI President Kevin Rudd joined CNBC Squawkbox along with former U.S. Senator and former U.S. Ambassador to China Max Baucus to discuss the latest in the U.S.-China trade negotiations. The following is the transcript of the discussion.

Becky (CNBC): You are both longtime watchers of [U.S.-China relations]. You know very well how the Chinese operate. So what do you think right now of these moves that [China is to waive tariffs for some U.S. soybean and pork products]? Does this get us closer to the potential for some sort of a deal on December 15th or at least not raising tariffs here. What do you think, Kevin?

Rudd: Well I think given these moves by the Chinese customs authorities, it’s a positive indication of where things might go. As I’ve said on this program before, my judgment is that it’s overwhelmingly in both sides interest to get a deal this year and I actually stick by that despite all the sound and all the ferment and all the statements recently by the President out of London saying we could do one after the next presidential election. I think this is still on and I would be very surprised if we don’t have a deal before the end of the year.

CNBC: By “still on” you mean that you think there is an official deal and as a result there are no additional tariffs that are put on by December 15th and that the old tariffs that are already existing are rolled off which is what the Chinese are asking for?

Kevin Rudd: Well, take those in sequence, December 15th tariffs, I’d be highly surprised if we move in that direction, not least because of the impact on American consumers but also I think this would actually tank markets in a big way. Secondly on existing tariffs, you are right to point that Becky because that’s where so much of the disagreement between the Americans and the Chinese to negotiators lie now. There will be to save face of word, China’s domestic face, some rollback of tariffs, how much we don’t know, but the sticking point of the President, I think, is on the actual quantum of the proposed Chinese agricultural purchasing order from American farmers.

CNBC: Max does that sound like a deal that you think President Trump could accept?

Baucus: I do, depends on the amount obviously. It’s like, irony here is of the President is asking for a certain amount of soybeans to be shipped from the United States to China, which is really kind of a controlling, as managing of the economy. It’s not a free market. It says you China, buy a certain amount of soybeans. I very much hope, I do think, I think frankly there’s some action by China today is good, it’s pretty clever. It’s gonna indicating that hey, we wanna stay at the table, we want to work something out here. Yes, I do think that’s true and I think there will be a deal.

Joe (CNBC): What would surprise you? I mean there are so many things that are out there right now including all the human rights issues that are taking place in Hong Kong, with the Uyghurs that have been brought up, Huawei — what’s going to happen with that part of it? There are a lot of really complicated parts. Do you think that just gets ignored for now?

Rudd: Often fascinating Becky is that despite, let’s call it all the other things going on in the U.S.-China relationship at present, we’ve just had the passage and the President has not vetoed the Hong Kong Human Rights and Democracy Act. China has not, as it was decided to abolish or to put to one side, the trade negotiations with the United States. We have the upcoming legislation through the House of Representatives on the Uyghurs in Xinjiang. These are major political factors for China, but what it does demonstrate is that the Chinese are vulnerable.

CNBC: That’s what I was going to ask you—Were you surprised when they didn’t really chafe as much as you would have thought? Were you surprised and did that indicate that they are vulnerable? They don’t want to through away the deal?

Rudd: I’ve said on this program before Joe, I think the Chinese are quite vulnerable on the economy. Growth is actually slow, despite that...

CNBC: I couldn’t believe they did nothing with that because that’s the kind of thing...

Baucus: They didn’t do nothing. They were very, very upset and they will do something, but I think you are right and applying that...

CNBC: Didn’t this raised an eyebrow for you? It’s like whoa, are they really going to, you know, they are not going to be more strident in their response? 

Baucus: I think that the main point is that there’s separation here. They are not alike.

CNBC: They know Trump had to sign it too because it’s veto-proof.

Rudd: So I think that’s to be a significant thing here as China is looking at its own vulnerable book and has said, we are going to put the 'stuff' to one side, get the trade deal done because we can’t have that headwind ourselves into 2020.

Watch the conversation on CNBC.