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US-China Trade Deal Could Be Sealed Before G-20 Summit – OpEd

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By Andrew Hammond*

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are scheduled to begin in Beijing on Thursday a new round of trade negotiations with China. While a deal is still by no means “in the bag,” there are growing incentives for both sides to cut an agreement at or before June’s G-20 summit.

US President Donald Trump said on Tuesday that “probably one way or the other we’re going to know over the next three to four weeks,” with both sides poring over a reportedly 150-page document they are working on, which he said would be an “excellent” agreement. So this could potentially mean a conclusion before June’s G-20 and a Trump-Xi Jinping meeting in April or May, given that the US president has a penchant for ego-boosting summits and is known to ideally want to seal any deal face-to-face with his Chinese counterpart.

The most recent stimulus for a positive conclusion of trade negotiations is the Mueller report’s conclusion last week, which is perceived in many world capitals to have placed Trump in a stronger domestic political position. With the charge of “collusion” with Russia (but not “obstruction of justice”) apparently found wanting, the report is neither the complete vindication for Trump that the White House suggests, nor the worst-case scenario either. In this context, the billionaire’s prospects of winning a second term are widely seen in Beijing to have risen, thereby providing more incentives for Chinese policymakers to double down in the trade negotiations.

The formal conclusion of the Mueller report also gives the president greater potential political space to focus squarely on 2020 and seek, in the coming months, to try to fulfill his “Make America Great Again” agenda. This program includes seeking to reduce the US global trade deficit and cracking down on trade practices perceived to be unfair. 

The Trump White House still has Beijing squarely in its sights here as signified, for instance, by the signing of legislation last year requiring the US Commerce Secretary to deliver a “Report on Chinese Investment” in the US to Congress and the Committee on Foreign Investment every two years up to 2026. The bill singles out Chinese investment as a security threat and zeroes in on Beijing’s “Made in China 2025” plan. So much so in fact that some in Beijing perceive the new US legislation to be just the latest part of a wider, grand strategy under Trump to thwart the nation’s rise as a global superpower. 

This sentiment underlines that, while hopes of a trade deal are rising again, tensions have by no means disappeared and still have the potential to severely disrupt what is probably the world’s most important bilateral economic and political relationship. It is important to note here too that Trump is under political pressure from some Democrats over the terms of any trade deal.

Take the example of Senate Minority Leader Chuck Schumer, who said last week that Trump should not “back down” and take a deal based largely on Beijing’s purchase of US soybeans and other goods. The long-time China hawk, now one of the most powerful Democrats in the nation, also tweeted that: “Now’s not the time to drop $200 billion in tariffs just because China’s close to a deal.”

All of these factors, alongside the complexity of the agreement currently being negotiated, are among the reasons why progress has dragged after Trump had set a tentative deadline of this month to try to reach a deal. And, in this still uncertain context, Xi is unlikely to want to travel to the US for (or host in China) a high stakes summit with Trump unless a deal is more or less completely brokered beforehand.

This is especially so after the US-North Korea summit in Vietnam last month, which ended in a diplomatic disaster. After months of painstaking negotiations were expected to yield a deal, Trump “walked” out from talks with Kim Jong Un. The mercurial nature of the US president is widely recognized in Beijing as a relevant factor in any negotiation end-game as, while economic and security fundamentals will largely determine the course of ties in the coming years, personal warmth between the two leaders could also be key, as was the case during the Obama years. 

Should talks break down in the coming weeks, despite the presently positive mood music, Beijing will know there remains the possibility that Trump’s rhetoric will get very hostile again, as during much of 2016 and 2017. It is this narrative that Trump may yet return to if he judges it to be in his political interests.

Taken overall, both sides now have growing incentives to conclude a trade deal this spring. However, talks could yet break down again and any final breakthrough may require the personal intervention of Trump and Xi at the G-20, or a special summit beforehand in China or the US. 

  • Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics

Arab News

Arab News

Arab News is Saudi Arabia's first English-language newspaper. It was founded in 1975 by Hisham and Mohammed Ali Hafiz. Today, it is one of 29 publications produced by Saudi Research & Publishing Company (SRPC), a subsidiary of Saudi Research & Marketing Group (SRMG).

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