Long-term mechanism key to trade talks

Source:Global Times Published: 2020/1/6 18:33:41

Illustration: Luo Xuan/GT

At the beginning of the new year, US President Donald Trump tweeted that a phase one trade deal would be signed at the White House on January 15. He also said he would visit Beijing following its signature, and begin phase two negotiations. It is clear that the world's two largest economies are far from the end of their trade talks, and a global trade pattern has yet to be determined.

As the talks are making interim progress, it is now time to consider how long a phase one deal truce will be if everything goes well. The domestic market seems relieved at present, with many believing Trump will stop confronting China on trade issues. Unfortunately, that is unlikely to be the case.

The trade talks have been ongoing for nearly two years. During that time, there has been no shortage of incidents showing Trump's promises are unreliable. His business background means his approach to diplomatic negotiations is entirely different to that of his international counterparts. Trump will push his peers to their limits, just as he would in a business negotiation. To benefit his own side, he will often employ "salami tactics," even at the expense of credibility. Such tactics have been seen in the course of many US diplomatic talks including the North Korean nuclear issue and the Iran nuclear issue.

A phase one trade deal with China is now very important for Trump. His administration, amid an impeachment process, needs a deal to prove the effectiveness of its policies to voters. However, the validity of a phase one deal will be much shorter than expected. It is anticipated that Trump will begin phase two trade talks immediately after reaching his goal of pushing China to import more US agricultural products. He is likely to make tougher demands which are closer to the fundamental reason the US first launched its trade war with China: to maintain its industries' competitive edge in the world.

Under such a circumstance, what kind of attitude should China adopt in future China-US negotiations? The country's primary goal should be to build a long-term mechanism for economic and trade exchanges between the two countries, rather than achieving only short-term interests. In other words, China's primary goal is the stability of its overall economic and trade relationship with the US, forming a stable framework and communication mechanism that is mutually agreed upon.

A long-term trade mechanism could become a binding force for the US, preventing Washington from erratically cracking down on China using trade issues. The Trump administration's contempt for international mechanisms has in reality caused much controversy in the US. Once a long-term mechanism is established, appeals from US companies and other institutions can be fully communicated and discussed, forming restrictions for the future policies of the Trump administration.

The China-US trade talks do not only concern those two countries. They raise a more profound question: Is the process of rule-based globalization on the brink of failure? If the US continues to ignore globalization and multilateralism, the impact on globalization will be disastrous.

Therefore, the whole world is carefully watching the two countries' talks. China's core concerns are related to the interests of other countries that support trade multilateralism and the future of globalization. On this issue, China can win the support of such countries while striving for a long-term trade mechanism.

The article was compiled based on a report by Beijing-based private strategic think tank Anbound. bizopinion@globaltimes.com.cn


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