(MarketWatch) OK, let’s assume that something deserving the name “U.S.-China trade deal” has been reached — even one dubbed “Phase One” or “preliminary.” Deep doubts would remain justified about whether it can possibly serve American interests.
For example, where’s even an English-language version? There’s nothing new about such agreements coming out in both English and Chinese, raising thorny questions about ensuring that key terms in both languages are commonly understood — on top of all the towering issues raised by China’s long record of flouting official commitments it’s made.
But if something worth announcing officially on both sides has actually been produced, why is the most detailed description so far this statement from the U.S. Trade Representative’s (USTR) office?
No specifics
Why does this statement contain plenty of specifics about U.S. tariff reductions (except for the actual dates by which American levies on imports from China will be cut) but no specifics about China’s own pledges?
In that vein, no useful accounts have been released of what China will actually buy from the United States (though it’s interesting that President Donald Trump has included manufactures on the list — not simply agricultural products and other commodities), and by when the Chinese will buy these goods. Special bonus — shortly after noon, the President said he “thinks” China will hit $50 billion in U.S. agriculture imports. Over what time period? Heaven only knows.
Don’t forget — such import increases will be the most easily described and verifiable aspects of any agreement.
Structural reforms
So maybe since these terms are still being left so vague, it shouldn’t be surprising that there’s absolutely nothing from the administration so far about “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.”
Even the Trump administration has viewed these issues — which lie at the heart of the intertwined U.S.-China technology and national security rivalries, as well as of the purely economic rivalry — as so challenging to address diplomatically that rapid progress can’t be made.
Why else would Trump have settled for now for seeking a shorter term, interim agreement?
If genuine breakthroughs have been made that will strengthen and safeguard and enrich Americans, terrific. But if so, what’s the point of couching them in generalities? And if not, what’s the point in claiming major progress?
Dispute resolution
Also completely, and crucially, omitted are any indications of what’s actually meant by “a strong dispute resolution system that ensures prompt implementation and enforcement.”
In particular, if the United States doesn’t insist on the last word in judging Chinese compliance and meting out punishment when agreement terms are broken, then this deal will work no better on behalf of U.S.-based producers (employers and employees alike) than previous arrangements under the World Trade Organization (WTO) and the old North American Free Trade Agreement (NAFTA) that pleased only the corporate Offshoring Lobby, its hired guns in Washington, D.C., and the Mainstream Media journalists who have long parroted its talking points.
So if the United States is not recognized as sole judge, jury, and court of appeals when dealing with Chinese compliance, history teaches that will be the case that the agreement literally will be worthless.
Politics are puzzling
The politics of this U.S. announcement are puzzling in the extreme as well.
China’s economy obviously has taken a much greater trade war hit than America’s — of course mainly because it’s so much more trade-dependent. Beijing’s dictators are struggling to contain unrest in Hong Kong.
The new U.S.-Mexico-Canada Agreement (USMCA), which will replace NAFTA, will offset some of the China-related losses suffered by the agriculture-heavy states so critical to Trump’s re-election hopes. The polls show unmistakably thatthe president is winning the impeachment battle in the court of public opinion.
And even before the congressional Democrats’ efforts to remove him from office began bogging down, their party’s slate of presidential candidates had started looking so weak to so many in Democratic ranks that a gaggle of newcomers jumped into the primary campaign on stunningly short notice.
In short, this is no time for Trump to reach any deal with China — whatever phase it’s called. In fact, it’s the time for the president to keep the pressure on (because whatever weakens the Chinese economy ipso facto benefits the United States these days).
And since a deal that promotes real U.S. interests remains impossible to reach because of verification obstacles, it’s also time for Trump to start signaling to American business that major tariffs on China are here to stay for the time being, and may even increase down the road.
That’s one way to eliminate any uncertainty employers are feeling about doing business with China that will increase the odds of building a new, improved bilateral relationship — not restore its epically failed predecessor.
Reasons to hope
The only reasons for optimism on the U.S.-China trade front right now? Just two that I can identify, but they’re hardly trivial.
First, for all the reasons cited above, the supposed Phase One deal is clearly still so tentative and, frankly, so flimsy, that it’s likely to fall apart sooner rather than later.
Second, U.S.-China decoupling will continue — precisely because the closely related technology and national security gulf dividing the two countries can’t be bridged diplomatically, and because even previously gullible U.S.-owned companies in numerous industries will now be thinking twice about exposing themselves, or exposing themselves further, to the whims of China’s utterly lawless and unreliable government.
