Bungling The China Deal - Jan 31, 2019
Post ReplyForum


cyber horse

02/19/2019, 09:50:58




Author Profile | Edit


Jan 31, 2019, 10:56pm

Bungling The China Deal

Phil Levy

What is truly remarkable about the Trump administration’s approach to China is how it has managed to put itself in a weak position, while controlling the terms of engagement at every step along the way.

Two days of Washington meetings concluded this week with few concrete signs of actual progress. Both sides praised themselves for constructive discussions, of course, and President Trump enthused about the possibility of “the biggest deal ever made,” but he has been known to exaggerate about such things in the past.

To recap how we got here, the Trump administration determined last spring that China had taken action against U.S. intellectual property. It assessed the damages at $50 billion per year and threatened to slap tariffs on that value of U.S. imports from China. In a futile attempt to deter Chinese retaliation, President Trump threatened tariffs on an additional $200 billion of imports should China dare to respond. Thus, by late September, the United States had applied tariffs to $250 billion of import from China, provoking painful retaliation against U.S. exports such as soybeans and sorghum.

Liu He, the Chinese Vice Premier who was in Washington this week, had come last May to try to negotiate trade peace. At that time, hee actually struck a deal with Treasury Secretary Steve Mnuchin, but the White House reversed it a week later. President Trump then met with Chinese President Xi Jinping in early December and reached an agreement to hold off on further threatened tariffs for 90 days while the two sides tried again to negotiate.

Now, with nearly two thirds of the allotted time elapsed, the Trump administration faces a difficult choice. It can accept a very limited deal in the next month – of exactly the sort it has repeatedly denounced – or it can impose additional damaging tariffs that will hurt American companies and consumers and likely spook markets.

Where did Team Trump go wrong? Here are four key missteps.

1. Premature retaliation.

Because President Trump fundamentally misunderstands the impact of tariffs, he is eager for excuses to apply them. Thus, he had committed to escalating the tariff fight before the first new duty was even applied.

The problem is that tariffs can cause pain to Americans. That pain is less if there are substitute goods readily available from the rest of the world, for example, but that is not always the case. The administration sorted U.S. imports into tranches that effectively were “least painful,” “more painful,” and “most painful,” where pain is measured from the perspective of the U.S. consumer.

The rapid escalation of retaliatory threats meant that the administration was left threatening to apply the most painful tariffs as early as January 1. That was a likely reason the administration agreed to postpone the tariffs at the Buenos Aires meeting. Public aversion to this potential pain means the administration is now more motivated to strike a quick deal than they might have been, had the President been more judicious in his threats.

2. The tight deadline.

There was no particular reason why the administration had to give itself a mere 90 days from the Buenos Aires meeting. It was a stretch that covered both the year-end holidays in the United States and Chinese New Year. It was enough time to negotiate a very limited modest agreement, but nowhere near enough time to hash out the sort of deep structural changes that the administration has demanded. Now, the looming deadline increases pressure on President Trump to strike the sort of deal China favors (e.g. one limited to some legal changes and promises of future purchases).

3. Excessive breadth in demands.

The White House statement on this week’s talks lists a set of issues roughly as lengthy as those reported last spring. The failure to focus dramatically weakens the U.S. position. Given Chinese eagerness to deal, a demand for satisfaction that was limited to a couple of feasible and important areas – such as intellectual property violations and cyber attacks – might have compelled a productive response. Instead, the inclusion of topics such as the bilateral trade deficit casts doubt on whether the United States is serious and invites the Chinese to present modest offers of simple purchases.

4. A pre-planned summit.

In his descriptions of this week’s meetings, President Trump hinted at the possibility that he might meet again with President Xi Jinping, perhaps in conjunction with a February Asian trip to meeting North Korean leader Kim Jong-un. While it is easy to see how such a trip would play to President Trump’s self-image as a uniquely-skilled negotiator, it is a very bad idea. A leaders meeting with Xi in Asia would dramatically heighten the pressure on President Trump to accept whatever deal the Chinese put forward. It is very hard to imagine President Trump being able to walk away from such a summit empty-handed, admitting defeat. Such a meeting should only occur as the culmination of successful, lower-level negotiations. Given the aforementioned negotiating missteps, however, there is little time for such preparatory work.

It now seems increasingly likely that President Trump will settle for a modest Chinese offer and at least postpone the tariffs that are due on March 1. The question then will be how he handles the disappointed reactions from those who believed his ardent criticisms of Chinese practices and his promises of fundamental change.

https://www.forbes.com/sites/phillevy/2019/01/31/bungling-the-china-deal/#19ae8d3656c4






Recommend | Alert |
 Post ReplyBack

Followups

�������ʿ֪ʶ��Ȩ����ʤ

Copyright Infringement Jury Trial Verdict

Copyright Infringement Lawsuit Software Jury Trial Verdict

Judge James Ware Presiding: Copyright Infringement Trial

Copyright Trial Attorney

Ninth Circuit Copyright Law - Copyright Jury Trial