OK, business newspaper editors, it is time to rewrite some of your headlines and articles. It turns out that phase two of a trade agreement is unlikely to happen because …. phase one is struggling to get established.
Citing U.S. and Chinese officials, Reuters is reporting that a second phase of a U.S.-China trade deal is looking less likely to happen next year since they cannot seem to strike a preliminary phase one agreement.
There are two issues that are at play: bravado and big-ticket items.
Beijing officials say that “It’s Trump who wants to sign these deals, not us. We can wait.” But President Donald Trump keeps saying that China is begging for an agreement. Both things can be true: The Chinese economy is cratering and President Trump needs a deal before the presidential election in November.
The first phase delved into U.S. agriculture, Huawei, intellectual property (IP) theft, and opening China’s banking system to foreign players. The second phase is likely to include U.S. intellectual property (again), Beijing’s militarization of the South China Sea, and its human rights record.
If you thought phase one was difficult to come to fruition, then one can only imagine how hard the second will be!
More from the newswire:
Further complicating the issue, Trump’s economic advisers are split: some are pushing Trump to agree to a quick phase one deal to appease markets and business executives, others want him to push for a more comprehensive agreement.
Beijing officials, meanwhile, are balking at pursuing larger structural changes to managing China’s economy, anxious not to appear to be kowtowing to U.S. interests.
Both China and the United States have a clear interest in getting a phase one deal completed relatively soon to soothe markets and assuage domestic policy concerns, said Matthew Goodman, a former U.S. government official and trade expert at the Center for Strategic and International Studies.
He sees a good chance that the two sides will hammer out some phase one deal, but is far less convinced that a broader deal can be reached before the election. One key problem, he said, was the continued lack of a coherent U.S. strategy for dealing with China.
Is it time to just give up on any hopes of a deal? Perhaps if you do that is when a deal will be signed.
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