WASHINGTON, Dec 16, 2018 (BSS/AFP) – Though markets are on edge and the
arrest of a top Chinese executive threatened to spark a crisis, there are
signs the US-China trade war can be resolved without further collateral
damage to the global economy.
The whole world is watching the talks between Washington and Beijing,
hoping a 90-day tariff truce will hold and the sides can end a dispute that
threatens hundreds of billions of dollars in trade.
In recent days the small signs of progress, and perhaps more importantly
the absence of new threats from President Donald Trump, have cheered
investors worldwide, reversing some of the bloodletting that erased all of
2018 gains on Wall Street.
And the arrest in Canada of a senior Huawei executive amid US charges the
company violated sanctions on Iran raised fears the renewed tensions could
disrupt the talks — but so far this does not seem to have happened.
“What is clear is that both President Trump and the Chinese are trying to
separate the issues,” said Edward Alden, a trade expert at the Council on
Foreign Relations.
In fact, Beijing on Friday announced that starting January 1 it would
suspend the additional punitive tariffs on US autos imposed in retaliation
for Trump’s tariffs on China, cutting them to 15 percent from 40 percent.
And the talks last week produced reports the country would restart
purchases of soybeans from American farmers and ease investment rules for US
companies.
“China wants to make a big and very comprehensive deal. It could happen,
and rather soon!” Trump tweeted on Friday, applauding the decision on car
tariffs.
The ceasefire began after Trump met with Chinese leader Xi Jinping in
Buenos Aires on December 1 and agreed to hold off on further tariffs or
retaliation at least until March 1.
That means Trump will hold off on plans to more than double import taxes
on $200 billion in Chinese goods at the start of the year and will also
refrain from imposing tariffs on the remaining $246 billion in Chinese
products the United States imports each year.
– 90-day outcome –
Trade experts and observers agree the timeframe will not allow for a
comprehensive trade pact between the world’s two biggest economies.
Instead they say they hope to see a deal to roll back the tariffs and
continue negotiations on the Chinese policies that have long been irritants
to relations with Washington: forced transfer or theft of American
technology, restrictive investment rules and industrial subsidies.
“You can’t solve every problem with China in 90 days, but progress could
be made institutionalizing” changes to Beijing’s policies, Jake Colvin, vice
president of the National Foreign Trade Council, told AFP.
But he cautioned that both sides “need to figure out a path to a win-win
outcome. They both need to be able to say they gained something.”
US Trade Representative Robert Lighthizer is leading the negotiating team,
which includes Treasury Secretary Steven Mnuchin and White House trade
advisor Peter Navarro.
“The basic problem here is that the United States and China don’t trust
each other,” Alden told AFP.
“The best hope is a partial deal that addresses some of the US concerns
and then the negotiations to continue while the progress is closely
monitored.”
Navarro, an anti-China firebrand, last week warned that US negotiators
would hold “tough” with China, and said the key would be to “trust but
verify.”
But he also cautioned against watching day-to-day reports instead of
focusing on March 1, “when we’ll have a complete offer from China.”
– Back where they started –
Ironically, that would put the two sides essentially back where they
started before Trump took office.
Washington and Beijing had for over a decade conducted regular trade
negotiations to resolve disagreements, and when progress was slow — a
frequent complaint — or talks failed, the United States filed complaints
with the World Trade Organization.
But Trump, who uses uncertainty as a core negotiating strategy, jettisoned
diplomacy and went straight to hardcore tactics. He takes credit for bringing
Beijing to the table and for raising $11 billion in tax revenue from the
tariffs.
However, he seems to ignore the fact the taxes were paid by US businesses
and consumers, not by China, and the trade battle already has had an impact
on the US and Chinese economies, in addition to stock markets. Still, the
fact that Trump put Lighthizer — a veteran of 1980s trade talks with Japan –
– in charge of the negotiations is seen as a good sign.
“Bob Lighthizer is the only serious trade negotiator this administration
has,” Alden said. “And there is more substantive progress in the past two
weeks than there was in the previous two years.”