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Trump Signs China Trade Deal, Putting Economic Conflict on Pause

The agreement is a significant turning point in American trade policy and the types of free-trade agreements that the United States has typically supported. Rather than lowering tariffs and other economic barriers to allow for the flow of goods and services to meet market demand, this deal leaves a record level of tariffs in place and forces China to buy $200 billion worth of specific products within two years.

The deal also does little to resolve more pernicious structural issues surrounding China’s approach, particularly its pattern of subsidizing and supporting key industries that compete with American firms, like solar energy and steel. American businesses blame those economic practices for allowing cheap Chinese goods to flood the United States market, putting domestic firms out of business.

Instead, like the presidents who preceded him, Mr. Trump plans to rely on allies and the World Trade Organization to try to push China to change its ways.

“This Phase 1 deal is an extreme disappointment to me and to millions and millions of Americans who want to see us make China play fair,” Mr. Schumer said on the Senate floor. “President Trump’s Phase 1 trade deal with China is a historic blunder.”

The trade deal contains a variety of wins for American industry, including opening up markets for financial services, pharmaceuticals, beef and poultry.

The text outlines what China will buy from the United States during the next two years. That includes substantial purchases from American farmers, who have been hit hard by the trade war.

Of the $200 billion, just $32 billion, or 16 percent, of the purchases will be of farm products such as oilseeds, meat and cotton. Banks, drug companies and the energy industry are also big beneficiaries.

China has also committed to refrain from forcing American companies to hand over their technology as a condition of doing business there, under penalty of further tariffs. Beijing has also promised to refrain from devaluing its currency, the renminbi, to gain an advantage in export markets, among other pledges.

https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.html

Partisan reporting aside, even the times can't omit the highly positive aspects of the deal (underlined). Bringing Chuck Schumer's perspective into the conversation, or any other politician from either party, is odd since both parties have bent to China and agreed to sign weaker deals for decades, and until very recently, there was nothing wrong and nothing to criticize about those deals, very few politicians were consistently opposing those deals and consistently pointing out their deficiencies (Bernie Sanders is among the notable exceptions). A Bernie presidency will continue to keep China in check and he might just be able to deliver a phase two that Trump can't. 

Last edited by LurkerJ - on 17 January 2020

China’s deal to buy more US goods is ‘distortion of the market’, Europeans complain

After the deal was signed in Washington on Wednesday, Vice-Premier Liu He sought to reassure other countries that they would not suffer as a result of the agreement, but the message was not convincing for some.

Joerg Wuttke, president of the European Union Chamber of Commerce in China, said the purchasing commitment was “managed trade – meaning the US tells China what it should buy from America”, and it would lead firms from Europe to “wonder where our place is”.

China faced “less choice or possibilities of sourcing, say, soybeans from Brazil, or gas from Australia and Qatar, or coal from India, or aeroplanes from Europe, and this is distortion of the market”, Wuttke told reporters in Beijing on Thursday.

European diplomats fear the bloc could be sidelined as China puts its focus on the US. Chinese officials have repeatedly stressed that Beijing would continue to treat Europe as a partner, and the EU envoy to China was given a briefing on the trade deal by the foreign ministry on Thursday in a bid to ease concerns.

The new trade commissioner, Phil Hogan, who happens to be in Washington this week. Top of his mind will be finding a way to persuade Trump not to wage a tariffs war with the EU – a scenario that has haunted the bloc in recent months amid disputes over France’s new digital services tax and European support for Boeing’s chief rival, Airbus.

But pessimism persists in Brussels. “With South Korea, Japan, Canada, Mexico and now China under his buckle, the Trump administration has already indicated to dust off the outstanding issues with the EU – namely the trade deficit,” said Tobias Gehrke, a research fellow at the Brussels-based Egmont Institute.

https://www.scmp.com/news/china/diplomacy/article/3046426/chinas-deal-buy-more-us-goods-distortion-market-europeans

The EU isn't happy. 

Last edited by LurkerJ - on 17 January 2020

The China trade deal has a couple of incredible flaws.

1. China will only purchase $200 billion IF the market demands $200 billion in those products.
2. Some of the specific provisions are expecting China to purchase certain products at rates twice as high as their market has ever bought them at.

So it's doomed to fail right out of the gate.



Massimus - "Trump already has democrat support."

SpokenTruth said:
The China trade deal has a couple of incredible flaws.

1. China will only purchase $200 billion IF the market demands $200 billion in those products.
2. Some of the specific provisions are expecting China to purchase certain products at rates twice as high as their market has ever bought them at.

So it's doomed to fail right out of the gate.

1. How much the market has demanded in 2019? surely if we have that number we can easily estimate how much the market is going to demand in 2020? 

"Doomed to fail" is an interesting perspective, I am not saying it's the wrong perspective, because it might just be, however, I have been reading articles all day from different websites just to get the full picture and non of the articles had such a gloomy outlook. China may not meet the set target, but that's gonna be a problem for China to deal with as it puts more pressure on them, not the USA:

Analysts from financial services firm Daiwa Capital Markets agreed that there’s “a good possibility that China will fall short of expectations, either because the bar is too high or the track record suggests that enforcement is tricky.”

“In that case, it would be relatively easy for Trump to come back to the checklist again, impose new tariffs and/or ask for more concessions,” Daiwa analysts wrote in a Thursday note. “As the presidential campaign starts rolling, the China card is an easy one, and worth playing over and over.”

https://www.cnbc.com/2020/01/17/china-to-uphold-phase-one-commitments-in-us-trade-deal-ts-lombard.html

Beijing also has that right, but it made nearly all the concessions in the deal. That makes it more likely that the U.S. would be pressing China to carry out provisions to which it had only reluctantly agreed. If the U.S. acts, China can't retaliate -- or even appeal the dispute to the WTO -- unless it pulls out of the deal.

All parts of the phase-one deal are subject to those enforcement provisions, including purchases, intellectual-property protection and Chinese pledges not to use foreign-currency policy to help its exporters. While it is impossible to prevent Beijing from retaliating if it feels the U.S. is acting in bad faith, it can only do so by scuttling the deal, according to the agreement.

Beijing has little incentive to reignite the trade war by pulling out of the deal. As a result, the U.S. believes Beijing is unlikely to retaliate. "I think they would see it in their interest to stay in the agreement," said a senior U.S. official involved in the negotiations. "And this was designed to avoid them counter-retaliating or challenging us at the WTO."

If the system works as the U.S. hopes, other nations are bound to press China to put something similar in place. That would remake the global trade system and create a number of separate, unilateral enforcement mechanisms, said Deborah Lehr, a China expert at the Paulson Institute in Chicago.

"The Europeans would push for the same thing," Ms. Lehr said. "Otherwise, it would put [them] at a disadvantage."

https://www.wsj.com/articles/u-s-china-deal-could-upend-the-way-nations-settle-disputes-11579211598

No trade expert here, but I can hardly see how this deal is doomed. Happy to read more articles or analyses if you have some to share. 

Last edited by LurkerJ - on 17 January 2020

Biggerboat1 said:
EricHiggin said:

Maybe on the same day a presidential election is determined solely by a popular vote.

Don't need polls to figure out how those turn out.

What negative traits, if any, do you think Trump has relative to his peers?

That he's working for one of the largest 'companies' on the planet, and has around 300 million bosses to please, and practically does so for free? 



The Canadian National Anthem According To Justin Trudeau

 

Oh planet Earth! The home of native lands, 
True social law, in all of us demand.
With cattle farts, we view sea rise,
Our North sinking slowly.
From far and snide, oh planet Earth, 
Our healthcare is yours free!
Science save our land, harnessing the breeze,
Oh planet Earth, smoke weed and ferment yeast.
Oh planet Earth, ell gee bee queue and tee.

Overall, my take on the recent trade deal announcements (China deal and new NAFTA) is that both of them are positive steps, but they fall miles short of the radical re-imagining of economic systems, or the economic relationship between countries that Trump seemed to be aiming for. There will likely be small scale positive effects in specific areas of the US economy, but it is unlikely to significantly alter the economy at large. It seems predictions related to growth have largely remained in place, with many economists stating that the most significant change is a decrease in uncertainty and a decrease in tariffs (both solving problems that Trump created) while the actual text of the deal seems to be expected to have a much more minor impact.

I struggle to see this as a win for Trump. We went into this trade war with some fairly largely demands, and what we received at the end is a step towards normal in return for some minor agreements that wouldn't be surprising to see in the absence of this whole debacle.



sundin13 said:
Overall, my take on the recent trade deal announcements (China deal and new NAFTA) is that both of them are positive steps, but they fall miles short of the radical re-imagining of economic systems, or the economic relationship between countries that Trump seemed to be aiming for. There will likely be small scale positive effects in specific areas of the US economy, but it is unlikely to significantly alter the economy at large. It seems predictions related to growth have largely remained in place, with many economists stating that the most significant change is a decrease in uncertainty and a decrease in tariffs (both solving problems that Trump created) while the actual text of the deal seems to be expected to have a much more minor impact.

I struggle to see this as a win for Trump. We went into this trade war with some fairly largely demands, and what we received at the end is a step towards normal in return for some minor agreements that wouldn't be surprising to see in the absence of this whole debacle.

That's how a good businessman operates. You always ask for a little too much, knowing full well you're never going to get it. The point is that if you only ask for a little, you likely will get nothing. If you ask for a reasonable amount, you'll get a little. If you ask for way too much, you'll again, get nothing. If you ask for a little too much, you can now negotiate, and will end up closer to the reasonable amount you should be getting. Sometimes a little more, sometimes a little less.

Sounds here like he got a little less, but is in the range of what was seen as an acceptable compromise. If it wasn't, the deal wouldn't have gone through.



The Canadian National Anthem According To Justin Trudeau

 

Oh planet Earth! The home of native lands, 
True social law, in all of us demand.
With cattle farts, we view sea rise,
Our North sinking slowly.
From far and snide, oh planet Earth, 
Our healthcare is yours free!
Science save our land, harnessing the breeze,
Oh planet Earth, smoke weed and ferment yeast.
Oh planet Earth, ell gee bee queue and tee.

EricHiggin said:
sundin13 said:
Overall, my take on the recent trade deal announcements (China deal and new NAFTA) is that both of them are positive steps, but they fall miles short of the radical re-imagining of economic systems, or the economic relationship between countries that Trump seemed to be aiming for. There will likely be small scale positive effects in specific areas of the US economy, but it is unlikely to significantly alter the economy at large. It seems predictions related to growth have largely remained in place, with many economists stating that the most significant change is a decrease in uncertainty and a decrease in tariffs (both solving problems that Trump created) while the actual text of the deal seems to be expected to have a much more minor impact.

I struggle to see this as a win for Trump. We went into this trade war with some fairly largely demands, and what we received at the end is a step towards normal in return for some minor agreements that wouldn't be surprising to see in the absence of this whole debacle.

That's how a good businessman operates. You always ask for a little too much, knowing full well you're never going to get it. The point is that if you only ask for a little, you likely will get nothing. If you ask for a reasonable amount, you'll get a little. If you ask for way too much, you'll again, get nothing. If you ask for a little too much, you can now negotiate, and will end up closer to the reasonable amount you should be getting. Sometimes a little more, sometimes a little less.

Sounds here like he got a little less, but is in the range of what was seen as an acceptable compromise. If it wasn't, the deal wouldn't have gone through.

I think there are a whole basket of reasons why that comparison is bad.

First off, this stuff that Trump said he wanted wasn't just something he said to Xi, it is something he said to the American people. Some people voted for him because they thought that he would bring in a radical reshaping of our trade policies. He has not. In politics, you have to be mindful of the people you are representing. If you oversell as a "negotiation tactic", you aren't just playing businessman, you are lying to your constituents.

And second, I honestly don't buy for a second that it was all a negotiation tactic. You have to take into account exactly how we got here. The radical steps, the trade wars, the billion dollar bailouts for farmers, the hit taken to our GDP and the damage done to the global economy. You don't set the bridge on fire for a small nod. If you do, you are an idiot. Like I said before, this is the type of deal that could come out of a good negotiation without the self-inflicted wounds. To only get this out of it, it demonstrates to me that Trump realized he was in too deep and pulled out because he needed a win and realized that his over-the-top measures weren't working. He basically hobbled across the point where he started and pointed at how far he had come, when really 99% of that journey was just climbing back up the cliff he threw himself off...



Iran assigns a war criminal to lead the investigation into the downing of Flight 752.

Well, nice to know how little Iran actually cares about justice. Starting to think I was right to call Iran a shit stain.



sundin13 said:
EricHiggin said:

That's how a good businessman operates. You always ask for a little too much, knowing full well you're never going to get it. The point is that if you only ask for a little, you likely will get nothing. If you ask for a reasonable amount, you'll get a little. If you ask for way too much, you'll again, get nothing. If you ask for a little too much, you can now negotiate, and will end up closer to the reasonable amount you should be getting. Sometimes a little more, sometimes a little less.

Sounds here like he got a little less, but is in the range of what was seen as an acceptable compromise. If it wasn't, the deal wouldn't have gone through.

I think there are a whole basket of reasons why that comparison is bad.

First off, this stuff that Trump said he wanted wasn't just something he said to Xi, it is something he said to the American people. Some people voted for him because they thought that he would bring in a radical reshaping of our trade policies. He has not. In politics, you have to be mindful of the people you are representing. If you oversell as a "negotiation tactic", you aren't just playing businessman, you are lying to your constituents.

And second, I honestly don't buy for a second that it was all a negotiation tactic. You have to take into account exactly how we got here. The radical steps, the trade wars, the billion dollar bailouts for farmers, the hit taken to our GDP and the damage done to the global economy. You don't set the bridge on fire for a small nod. If you do, you are an idiot. Like I said before, this is the type of deal that could come out of a good negotiation without the self-inflicted wounds. To only get this out of it, it demonstrates to me that Trump realized he was in too deep and pulled out because he needed a win and realized that his over-the-top measures weren't working. He basically hobbled across the point where he started and pointed at how far he had come, when really 99% of that journey was just climbing back up the cliff he threw himself off...

Yes, Trump at times acts like he's greater than God, performing miracles. Everyone knows that's B.S, but it does project confidence and strength, which works for many. Nobody, or very few possibly, backing Trump, actually believe he's going to completely change the system. At best he's going to be able to get the train back on the tracks, and maybe make some headway if he get's a second term, maybe.

It likely is. I'm looking for a clip I saw quite a while back but can't find it. I thought it was McConnell, yet I'm having trouble finding it because it maybe it wasn't him, but it's definitely of somebody who's around Trump, and they talk about Trumps negotiation tactics and that he always goes a little overboard so that he actually get's what he wants in the end, which has been working for him. You let the other side think they've beaten you down to a point you're finally willing to take the much lesser amount they want to give you, when really that's exactly what you wanted in the first place.

You also initially said you have a hard time seeing this as a win for Trump, yet you just said it was a win for Trump. So is it a win or not?



The Canadian National Anthem According To Justin Trudeau

 

Oh planet Earth! The home of native lands, 
True social law, in all of us demand.
With cattle farts, we view sea rise,
Our North sinking slowly.
From far and snide, oh planet Earth, 
Our healthcare is yours free!
Science save our land, harnessing the breeze,
Oh planet Earth, smoke weed and ferment yeast.
Oh planet Earth, ell gee bee queue and tee.