Chinese-U.S. trade negotiations have been in the news this past week. It appears that the Chinese had agreed on specific principals and then changed their mind, causing President Donald Trump to raise the tariff flag and raise tariffs to 25 percent on $200 billion in Chinese imports that had 10 percent tariffs on them for almost a year. China did agree to come back to the U.S. and resume trade negotiations later last week.
We in agriculture are all ready for talks to finish up and have a fair-trade agreement with China. It has been revealed that this is a common tactic that China uses: try to change the agreement at the last minute. But it’s also a Trump tactic to make a few threats to get what he wants.
In the meantime, agriculture has been patiently waiting on the sidelines and ready to resume enhanced trade with China and eliminate tariffs on countries we already do business with.
“The document was riddled with reversals by China that undermined the core U.S. demands,” the sources told Reuters.
“In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation.”
U.S. Trade Representative Robert Lighthizer views changes to Chinese laws as essential to verifying compliance after years of what U.S. officials have called empty reform promises.
It’s obvious that the two largest economies in the world need each other to grow their respective economies. But they don’t trust each other and why should they? China is still a communist country with 1.4 billion consumers. The U.S. is a democracy with 330 million consumers. The two cultures just don’t mix well.
Jamie Dimon, CEO of JP Morgan, said in an interview last week, “China can do something that the rest of us can’t do: They can manage industrial policy, fiscal policy, monetary policy in a coordinated way, which is why we think they can accomplish 6.5 percent growth.”
How can you trust a communist government, especially one like China that has a track record of taking advantage of the world? Their belt and road initiative seems like a good idea for commerce, but the Chinese make these countries beholden to them with massive amounts of capital they don’t have. They loan you money, then they own you; sounds like a page out of a Mafia playbook.
I’m surprised that Trump has taken on China by himself. We know he likes unilateral trade deals, but this is a perfect multilateral trade deal that the rest of the free-trading world would engage in. It doesn’t appear that many countries really like doing business with China.
Does anyone really trust China to do the right thing? Just look at the corruption in their own country to that should tell us all we need to know about fair trade. The list of bad behavior deeds is long and current.
Michael Pillsbury at the Hudson Institute said last week that China won’t give up on cybersecurity and hacking; it’s too lucrative to give up. They won’t give much on forced technological transfers to gain market access, because you can’t enforce it. China’s state-owned enterprises are too important. They would be giving up too much leverage over the economy.
But the U.S and China need each other to grow, and they both know it. They also appear to negotiate like a couple of building contractors threatening to take their business elsewhere if they can’t come to a deal. With China there is nowhere else to go. The U.S. has always given other countries the benefit of the doubt on trade and WTO enforcement doesn’t mean much, so it’s time for someone to play a little hardball with China. And, from what I understand, if Chinese leadership doesn’t like to lose and be shamed, it may cost a life.
We would all like this to be over. Once they clear up the fraudulent behavior and can verify, it should be over. Then, hopefully we can get back to normal trading relationships and see a rally in agricultural product values. —PETE CROW
