During a phone conversation last year with Bob Woodward regarding the latter's then-new book, “Fear: Trump in the White House,” President Trump claims that he is in the process of making some of the greatest trade deals ever to be made in history.
Such a great deal is certainly not going to be completed at a deputy ministerial level, which was just worked on by Deputy U.S. Trade Representative Jeffrey Gerrish and his Chinese counterpart at the Ministry of Commerce here in Beijing. This is the 6th round of negotiation so far since a trade dispute erupted in the middle of last year. I predict there will be at least two more rounds, if not three.
The U.S. delegation includes officials from the Treasury, and energy and agriculture departments, as well as the State Department and the White House, according to the Office of the U.S. Trade Representative. So it is clear this round of negotiation is more about resolving the trade imbalance issue as opposed to the broader structural issues USTR Robert Lighthizer is so fixated on.
These structural issues and their implementations are complicated and unlikely to be negotiated over within just three days. That means this round is mostly about buy, buy, buy from China's perspective.
Not surprisingly, it has been reported that China has made commitments to purchasing a significant amount of American agricultural and energy products. But it is also likely that the two sides have made some headway at least in the areas of intellectual property rights protection and forced technology transfer, for which China is reportedly ready to legislate.
A U.S. farmer walks through his soy fields as China's retaliatory tariffs hit the U.S. soybean market. /VCG Photo
After the talk, both sides issued a press release respectively. The good news is that their contents are not that far apart. But the bad news is that there is no joint statement. The U.S. side's press release, which appears to me to be a carefully drafted document by a State Department lawyer, said the U.S. delegation is heading back to Washington for guidance.
Guidance from whom? Well, the last time this kind of situation happened was when U.S. Secretary of Commerce Wilbur Ross came to Beijing to negotiate in June last year. He issued a similar statement before leaving the city.
But after going back to Washington, the deal he negotiated was abruptly killed by Trump. According to Bob Woodward's book, Trump killed the deal in sort of an insulting way by telling Ross that he has passed his prime and that he doesn't need Ross to negotiate for him.
Well, I hope that is not the case for Jeffrey Gerrish this time, who appears to be at least a few years younger than Ross. But my concern is that right now could not have been a worse time to engage in an intelligent conversation with President Trump. Washington is shut down. The President is home alone in the White House. And his temper tantrum is apparently on full display on national TV.
Members of the U.S. Secret Service Uniformed Division patrol outside of the White House in Washington, D.C., January 9, 2019, on the 18th day of the partial government shutdown. /VCG Photo
If the wall on the southern border isTrump's Teddy bear, a trade deal with China would be his Thomas' train. He desperately needs both. My advice to him would be that China's top trade official Liu He is at least easier to deal with than Charles Schumer and Nancy Pelosi.
Liu is going to head to Washington soon to continue the negotiation, most likely about those structural issues. Honestly, I think many of those things the U.S. wants on those issues are indeed in China's long-term interests, even though some of them may appear to be painful in the short run.
More importantly, my optimism lies in the thought that the leaders in China understand this and they are bent on continuing the reform and open-up policy. Hopefully, the greatest trade deal ever in history will be concluded before Washington opens up for business again.