Be sceptical of Trump’s new trade deal with China
Donald Trump and Xi Jinping
As with so many assertions from President Trump, skepticism is in order about his announcement Friday of a “phase one” trade deal with China.
Start with the seemingly straightforward issue of exactly what Mr. Trump got in return for reducing some U.S. tariffs on Chinese imports and forgoing others that were set to take effect Sunday – his key concession.
He has implied that the deal will soon mean the Chinese buy $50 billion a year worth of U.S. food products.
The U.S. trade representative, Robert Lighthizer, suggested, though, that the $50 billion figure was a longer-term goal; U.S. officials told Reuters Friday that Beijing has actually agreed to buy $8 billion more per year of commodities over the next two years, over the $24 billion purchased in 2017, the last pre-trade-war year. Beijing itself offered no specifics at all.
The details matter – a lot. $50 billion in new commodity purchases would represent an implausible doubling of pre-trade-war U.S. sales and a potentially huge dislocation to global commodity markets. No actual document will be signed until next month, the two sides said, at which point we may finally find out the actual content .
It’s better to have a truce on the trade front than not, but it would be better still to have actually achieved fundamental progress after 17 months of costly and destabilizing conflict, the burden of which has fallen on U.S. farmers, consumers and manufacturers.
That has not happened, apparently. The administration said the Chinese agreed to “structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange,” which sounds like a version of the relatively superficial adjustments Mr. Trump announced – and quickly retracted – in October.
The limited China truce, with the prospect of continued tariffs and haggling over market share, further confirms that Mr. Trump envisions an essentially permanent trade struggle with not only China but the entire world. Also this week, the administration allowed the World Trade Organization’s appeals panel to lapse for lack of a quorum, thus casting the preeminent global commercial dispute resolution agency into limbo.
As in the case of bilateral dealings with China, Mr. Trump’s complaints against the WTO had some basis. Previous administrations, including that of President Barack Obama, had faulted the appeals panel for creating wide-ranging precedents in trade law, often at U.S. expense, rather than correcting errors in initial rulings, as the United States believed it should.
Nevertheless, the WTO represented the culmination of long-standing U.S.-led efforts to bring the rule of law to global commerce. Mr. Trump seems happy to walk away from that work rather than use American influence to reform the body.
What lies ahead, for the United States and all other trading nations, is a global flow of goods and services increasingly shaped not by economic merits but by power politics. Mr. Trump seems to think American muscle will enable it to come out clearly ahead; the results of his latest deal with China suggest otherwise.
Source: Washington Post – Be skeptical of Trump’s new trade deal with China
Categories: Trade & Investment