China trade negotiation fact of the day
Brussels has been striving to secure the deal for six years, as it seeks to prove it has the negotiating muscle to broker meaningful agreements with Beijing that can defend European companies from unfair competition.
The European Commission and the bloc’s foreign policy chief signalled a tougher approach to China in March in a landmark document that branded it a “systemic rival” in some areas — an allegation Beijing denies. Ms Weyand, the chief official working for Phil Hogan, the EU’s trade commissioner, said that “we are moving at a snail’s pace on the investment agreement”.
That is from the FT., and of course that hardly counts as much progress. Elsewhere you will see Paul Krugman suggesting Trump has lost the trade war, but I don’t think he comes close to even seeing what the trade war with China is about. No matter what Trump says, the trade war is not about lowering the trade deficit. It is about (for a start) two major considerations: a) ensuring that national security-motivated partial economic decoupling takes place on terms not so unfriendly to America, and b) giving America levers to make sure China does not make such significant inroads into the world’s tech infrastructure, most notably with 5G but not only.
The stipulation of Chinese purchases of American exports, which probably they will not and cannot meet, is in fact a lever to give the United States enforcement power over the less tangible parts of agreement, which is indeed most of the agreement. We want China to be in default of the agreement terms, so we may threaten them with tariffs to enforce compliance elsewhere, and so that is a better rather than worse outcome for the United States.
On the trade war, agnosticism is still the correct opinion, at least so far, as we are not even sure we know of the full agreement, or if America and China are visualizing signing literally different versions of the “same” agreement. And even once (or if) the full text(s) is revealed, we still won’t for some while know how either a) or b) are going, much less relative to the relevant counterfactuals.
In general, I am finding that commentary on the trade war is of relatively dubious value, in part for partisan reasons. The key here is to set aside your political views, and spend a lot of time talking with national security people.