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U.S.-China trade talks to resume, but the final hurdle remains [Copy link] 中文

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Post time 2019-7-28 16:17:33 |Display all floors

Editor's note: Tom Fowdy is a British political and international relations analyst and a graduate of Durham and Oxford universities. He writes on topics pertaining to China, the DPRK, Britain and the U.S. The article reflects the author's opinion and not necessarily the views of CGTN.

This week U.S.-China trade consultations are in the process of resuming following a breakthrough at the G20 summit between U.S. President Donald Trump and Chinese President Xi Jinping, with a telephone conversation taking place between Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The exchange was described by White House National Economic Council Director Larry Kudlow as "constructive" with the view to proceeding to a "face-to-face" meeting afterwards.

Whilst the overall sentiment remains positive and non-confrontational, nevertheless some key differences remain in wrapping up the final segment of talks. In a series of interviews, Kudlow stated that the U.S. were looking for "quality, not speed" in trade talks and put "no timeline" on the outcome. Nevertheless, he also hoped that China would not seek to "wait out" the Trump administration.

The question is what now? And what should we expect from trade talks? Picking up from the collapse of talks in May, negotiations remain clearly in the "final hurdle" between the two countries, with most proposals already agreed with a few sticking points which the two sides have struggled to find common ground on. America is continuing to signal that they are serious about getting everything they want.

However, China is continuing to message that whilst it will negotiate, it will not be bullied into a one sided "capitulation" scenario by Washington. This means that whilst both leaders have the incentive to pursue a deal, it will be a sticky and non-straight forward process.

For the time being, the G20 summit outcome has produced a new stability wherein the risks of escalation in the trade war are low, allowing dialogue between the two countries to be facilitated in a non-contentious way. With both sides making mutual concessions (The ban on Huawei being relaxed in exchange for purchases of agricultural products), no timelines being set and the threat of further tariffs being revoked, there is finally a working environment for the "endgame" of dialogue to be pursued. Trump was now serious about finalizing a deal.

But the question remains, what form should that deal take? American officials have frequently cited that such an agreement was already "90 percent" complete by May, only for Trump to accuse China of backtracking on its commitments and further escalating tariffs. Ultimately, it is the remaining "10 percent" which is proving to be the sticking point between the two giants, elements of which the Chinese consider to be a total capitulation to American interests, than a fair deal.

Such issues have included: America's insistence to uphold tariffs even if such a deal is reached; demands for the purchase of American goods which exceeds local consumer demand in China; disrespect for Chinese sovereignty through the demand that all U.S. demands be codified into local law; a "unilateral enforcement mechanism" which gives Washington the right to slap tariffs back on Beijing if it feels certain requirements are not being met, which of course is very one-sided.

On this note, whilst China has kept an open door to negotiating, officials have carefully emphasized that capitulation or desperation for a deal cannot be a way forwards, a deal cannot be done for a deal's sake and it must respect the country's interests. As China's foreign ministry spokesman Geng Shuang noted recently "As for the talk that China wants to reach a deal more than the U.S., I certainly have no idea where this talk comes from," – This matches up from rhetoric from American officials who are also quite serious about their position, hence Kudlow's comments.

This means that whilst a deal is in the best interests of both sides to reach, moving past this, the final hurdle is going to take some flexibility. It is up to Washington, as the one making the demands, however to break that deadlock. If they are serious about these trade talks and for that matter if Trump desires to wrap up something he can claim as a "victory" for himself before the 2020 election, then he needs to be more pragmatic towards Beijing and avoid giving the impression that this is about "bullying" China.

With the post-G20 climate being the most favorable plateau to pursue a trade deal yet, this opportunity cannot be dragged out nor squandered. As future talks loom, there are big choices coming ahead. The only realistic deal is a fair, reciprocal and one based on good-will.

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Post time 2019-7-28 20:25:02 |Display all floors
This post was edited by markwu at 2019-7-28 23:00

One wonders if the US has ever considered why there can be no deal until there is a whole deal.

Accepting that is critical to a successful long term understanding that will accommodate the future and make new deals unnecessary.

It is also vital for renormalizing a relationship predicated on respect and cooperation, not tit-for-tat gaming to canvas personal glory because the endgame is to create a climate of mutual acceptance that can be the 21st century foundation for US-China relations so vital for the world of commerce, industry and human resource interchange despite saber-rattling by the present group of xenophobic anti-(China/CPC) hawks.

There is no point for the Americans to head to Beijing with a list and demand that every item in that list be accepted first before they will agree to drop some of their tariffs, sanctions and invasive terms.

In these days of autonomous self-driving 5G vehicular transportation, horse-trading is so passe.

After all, it was started only by Trump and his rightwingers. When the talks began, the US list was 4-pages and already unfair in its threateniing demands facilely couched to usurp the sovereignty of another nation's legal rights.

As the talks progressed, the US pitstopped to have a Huawei official kidnapped and then added more items until it has now become a 200-page document - in english.

China responded by saying there can be no deal until there is a whole deal. The US pretended not to appreciate the gravity of that statement, then went on to next demand the WTO strike China off as a developing nation else the US will unilaterally decide on its own, meaning it will thump its nose at the WTO while still its member.

In order to surmount the impasse, it is necessary for the talks to be finalized under a framework otherwise the US will be trying to check off a list of items that have been added over the course of talks before while China will be approaching the talks with a holistic viewpoint that says any unacceptability of one set of items will have to be reviewed in toto with the rest of the earlier items.

So it remains to say the framework of this whole deal covers the following:

All US tariffs must be removed;

The US' request for Chinese purchases must be reasonable;

The US must lift all restrictions on China's technology companies and academia;

China’s dignity and sovereignty must be respected.

This framework is reasonable because each of the four pillars of the framework is only in response to what the US had done before the talks had begun. They were never around before Trump and his cult had tried to threaten China.

Suffice to say, the US on the other hand has no framework because it has had no consistent foreign policy towards China - otherwise it would, under Trump, have not sold four contracts of weapons to the island so far besides officializing a US presence there after his predecessors have acknowledged there is only one China.

Rather than watch Eagle Eye, Executive Decision and Air Force One in the jetplane flying into Beijing next week, perhaps the US entourage should ponder all this mightily and carefully before the plane lands if only to avoid another fatiguing round of talks. Besides the upcoming global recession.

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Post time 2019-7-29 13:59:05 |Display all floors
markwu Post time: 2019-7-28 20:25
One wonders if the US has ever considered why there can be no deal until there is a whole deal.

Acc ...

There is no point restarting the negotiation at all which would be going nowhere.

In my view, no deal should be made before the 2020 election ...
Believe it or not, it's true.

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Post time 2019-7-29 14:35:57 |Display all floors
markwu Post time: 2019-7-28 20:25
One wonders if the US has ever considered why there can be no deal until there is a whole deal.

Acc ...

  re:  "Rather than watch Eagle Eye, Executive Decision and Air Force One in the jetplane flying into Beijing next week,"

The presidential fleet includes two identical jets, and whichever one the president is aboard is given the signal name Air Force One.

  I'm glad to see that President Xi isn't even trying to outsize #1,

however, rumors say that his will have 3 minature  hypersonic missile ...
   I just wonder if it's true...

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Post time 2019-7-29 23:22:44 |Display all floors
Lighthizer may bring his list but any 360-degree evaluation of his boss' own three years performance so far as Potus will reveal another list which is however most dispiriting:

he fired a record number of people for the most arguable if not inane reasons;

three best-selling books by ex-staff have been written recording in detail how chaotic and dysfunctional is his administration; the UK ex-ambassador to the US wasn't wrong then;

he has brought back white racism, american xenophobia, anti-me-too misogyny, supreme-court neo-conservatism, poor show of statesmanship, and added untrustworthiness plus bullyism almost amounting to a Don Corleone performance;

he promised to reduce the US national debt; it has instead ballooned;

he promised to make healthcare reachable; it hasn't;

his MidWest is still suffering; not only increasing, the pain has osmosed to his farmers now needing subsidies taken from tariffs paid by americans to his treasury;

the US working class is not better off; as a total, they got about a week's more wages from his tax relief but a lot more than that has been burnt paying the tariffs he imposed on Chinese goods they need;

the US income inequality has skyrocketed and it will get ugly if their economy sours;

China has not signed any deal;

the EU has not signed any deal;

DPRK has developed more nukes;

Iran remains bristling and his UK's new aircraft carrier is too leaky to patrol the Hormuz Straits;

the US gross trade deficit has increased, not decreased;

the last quarter growth rate was 2.1%, down from the forecast 3%;

the US economy still needs federal bailout despite high stock market but that's from buybacks using the tax relief; the stock price rises pay higher retirement dividends to millions of americans; if that market gets jittery, flips and nosedives as economic cycles come by, they will be out for blood;

meanwhile, thousands of US companies have applied for relief from his tariffs on China;

US tech companies have asked him in his Oval office to remove the restrictions on Huawei;

US farms have folded; their perishables have perished, and prices have tanked;

his 1,000-mile Wall is still invisible;

there are no state funds to upgrade infrastructure;

his banker DB is downsizing;

and, the US international reputation has become a monumental embarrassment to mankind which is why he has to resort to threats and arm-twisting.

After reading this list, Lighthizer must suddenly realize he is being made patsy as head charge of ...the Light Brigade.

He may even realize something else - whether the trade talks end in a mutual agreement seems now secondary to the other development foisted by the hawks that surround the american potus eagle. Namely, decoupling.

But decoupling is a thorny matter not easily stopped or reversed once started.  For instance, how extensive is it to be? When you are dealing with a peer, decoupling will inevitably mean total decoupling; you can't decouple some sectors only for a fixed period of time because there will be reactions, and reactions to the reactions, and collateral reactions to the first set of reactions which will be different from the second set of reactions nauseum.

Once started, it will snowball into a massive and ruinous isotopic separation with the widest possible negative meltdown consequences into the future.  How will that help his american folks or industries? He and his hawks should think again. And it will help if Bannon, Navarro and Rubio be shown the door first.

Take a simple example. Insourcing, or moving US production in China back to the US. For what he has done to Huawei, consider Apple as a counterpoint.  Last year, it assembled 220 million iPhones in China using a network of 1,500 suppliers, tens of thousands of engineers and hundreds of thousands of assembly workers. Because its supply chain founded in China is all so integrated to its other parts suppliers across the globe, any displacement however short-term will automatically reduce its parts availability, increase its prices and churn its global customer base.

That Trump won't exempt Apple from tariff for making one of its low-volume high-end Macs in China is testimony to how blithe Lighthizer's boss is on trade and industrial matters, considering the bigger-picture dependence of Apple on its supply chain carefully built and nurtured for years in China. Without that chain, Apple may be sitting next to Boeing soon.

Lighthizer's Potus said trade wars are easy to win. The strategy was to force US companies to insource. The spearhead was to tariff others to incentize US companies to relocate.  But their revenues, share prices, R&D and marketing budgets come from offshore productions and global multi-national earnings, and once they are on a roll, they cannot afford to stop and reduce their pace of production and development else they will lose customers and market shares to others which in turn will mean they will have to depend solely on the nationalistic fervor of american buyers whose bigger base has been buying on price made attractive for being assembled in China.

The strategy behind that spearhead was not to fight a trade war on multiple fronts. That's why Europe will only get a trade war visit by his Potus in November, six months after reigniting the tariff threat on China.

Now, if China stands firm and not deal (say, until 2020) should the 4 pillars mentioned earlier be not accepted, Europe may do the same to the US in November because it stands to benefit by participating to create a more vibrant China market after the US has decoupled from China and also to compensate for any business loss from a US-EC trade war by dealing more with China, especially when its economies like Germany are in retreat today.  Europeans can then fill all the vacuums in China left behind by the US. And that will be easier because China is opening up for the 21st Century.

If that happens, the entire US strategy of using tariffs, sanctions, barriers, entity list, national security threats et cetera will be left hanging and decoupled because in tariffing and bullying everyone, the US will end up tariffing and hurting no one save itself.

You know a country has gone mythomanic when even a railcar carriage is construed as a potential national security threat. All that MIT and CalTech education and it still fumbles.

(btw, it's Shanghai. But one can only think of'cuz.....

And, talking about national security threat and intrusions, spying etc, weren't eaves-dropping bugs found on Boeings supplied to China's head officials some time back? Should be easy to prove the next batches if any won't anymore have them, just get the US' CIA mischief-makers and riot-instigators still in Hong Kong SAR to show where they may be hidden next, on pains of......)

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Post time 2019-7-31 13:42:19 |Display all floors
The US is not negotiating in good faith; just when the talks restarted in Shanghai, Trump threatened China through a tweet, "President Donald Trump has warned China that his second term in office would herald a much tougher approach to the ongoing trade war with Beijing. Trump sent his warning via Twitter while gloating about China's economic slowdown, claiming it as evidence that his wide-ranging trade war is working, Reuters reported."

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Post time 2019-7-31 13:43:39 |Display all floors
Trump is desperate for a deal with China before 2020 election!
"Trump warned Tuesday that delaying any trade deal until after the 2020 election—in the hope that Americans will unseat the president—could backfire for Beijing."

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