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Trade Deal’s Success Is In Hands Of China

Donald Trump has been aggressive when it comes to trade. He’s made some enemies along the way, especially as it pertains to China. He increased their tariffs, and they retaliated with some hefty tariffs of their own. Now, the new trade deal looks like it’s going to be a success…as long as China decides to play along.

If the trade deal with China goes through, it can integrate two of the largest economies in the world more so than they already are. The only thing that needs to happen is for Beijing to honor commitments in such areas as agriculture and intellectual property protection.

Robert Lighthizer, the US Trade Representative, said that the whole agreement is determined by “who’s making the decisions in China.” That’s no pressure to deal with or anything.

Lighthizer told CBS News that it could be the hardliners or the reformers making the decisions. Depending on who calls the shots, the US will get one outcome or another.

There’s a lot going on with the trade deal. The “Phase One” part of the deal was announced on Friday. It will cancel additional duties that were supposed to go into effect on Sunday. This will reduce duties on approximately $120 billion worth of Chinese goods dropping from 15% to 7.5%. However, 25% duty is still in place on about $250 billion worth of other Chinese goods.

China, in return, has promised to better protect US intellectual property and pledged to buy another $200 billion worth of goods and services from the US over the next two years. This includes approximately $40 billion worth of agricultural products each year – a huge win for a number of farmers in the United States.

Lighthizer says that this is a big win with such massive numbers. Over the course of the next two years, there could be as much as $100 billion coming in of new sales for agriculture.

This leads to a number of questions, namely whether US farmers will be able to accommodate the increased demand or not. There is worry that farmers may have to siphon sales away from other export markets that are already in place.

Further, there has been a concern about whether Trump is actually trying to separate the US economy from China or reach an actual trade agreement. Much of this has to do with his aggressive stance on imposing tariffs on billions of dollars of Chinese goods. Lighthizer has attempted to clear the air by indicating the objective has always been to tie the two economies closer together.

The trade representative tried to explain that the deal is to integrate two very different systems so that it is beneficial to both countries.

The Trump administration recently experienced another win. Last week, the House Democrats along with the AFL-CIO have endorsed a newly revised North American trade agreement with North and South neighbors, Canada and Mexico. Changes were made to the agreement to toughen up labor enforcement provisions as well is to weaken intellectual property protections in the area of life-saving biologic medicine.

Tweaks were made in order to get bipartisan support. Now, congressional approval is expected with the house to vote on the bill this week. The Senate will be following suit in early 2020 once the Trump impeachment trial has been finished.

Lighthizer commented that the weakening of the Biologics provision worsened the trade deal a bit but the package was better overall due to some of the concessions that Republicans and Democrats had to make. The labor enforcement, he explains, is not a “Republican” issue. It should be an issue that everyone wants to see simply because Trump wants to make sure that Mexico is enforcing its labor laws. Otherwise, manufacturing workers in America will have to compete with people who are faced with very different working conditions.

With the new NAFTA deal hopefully signed and in place by early 2020, it appears that the only trade deal that is left on the table is the one with China. As long as China chooses to play along with the deal that has been placed in front of them, many of the tariffs initially imposed will be removed. Further, it can lead to all sorts of incredible benefits for farmers across the US assuming that they can keep up with the demand.

Maybe, once China proves they can make the deal successful, the Dems can stop criticizing all of the ways that Trump has actually worked to improve the economy.