{"id":48777,"date":"2019-07-01T15:21:55","date_gmt":"2019-07-01T05:21:55","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=48777"},"modified":"2019-07-01T15:33:43","modified_gmt":"2019-07-01T05:33:43","slug":"trade-war-truce-trumps-multilateral-concerns-at-g20","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/trade-war-truce-trumps-multilateral-concerns-at-g20\/","title":{"rendered":"Trade war truce trumps multilateral concerns at G20"},"content":{"rendered":"
<\/figure>\n

At the weekend\u2019s G20 meeting in Osaka, US President Donald Trump and his Chinese counterpart, Xi Jinping, agreed that their countries would resume economic and trade negotiations<\/a>.<\/p>\n

Trump also said US companies could resume sales to Huawei. As he put it<\/a>: \u2018[W]e sell to Huawei a tremendous amount of product that goes into the various things that they make. And I said that that\u2019s okay, that we will keep selling that product. These are American companies, John, that make product. And that\u2019s very complex, by the way. Highly scientific.\u2019<\/p>\n

This comes from two things. First, US companies that supply Huawei\u2014like chipmakers Qualcomm, Intel and Broadcom\u2014don\u2019t want to lose revenue. As Trump said, we\u2019re talking about \u2018a tremendous amount of money\u2019 and US companies were \u2018very upset\u2019 about a loss of sales.<\/p>\n

The second reason flows from Xi\u2019s line that the US must respect the Chinese state\u2019s \u2018core interests<\/a>\u2019 in any negotiations. Huawei qualifies here. It\u2019s a core element of Xi\u2019s drive for global strategic and technological dominance, and the company was obviously hurting more from the US freeze than its bullish media statements indicated.<\/p>\n

But the Huawei issue is parked, not resolved. The company remains on the Commerce Department\u2019s entity list, so it\u2019s about granting licences<\/a> to US firms where the sale of their products is no threat to national security. Trump also said he wants to see \u2018where we end up\u2019 before entering any discussion on Huawei with Xi, noting that \u2018we have a national security problem, which to me is paramount\u2019.<\/p>\n

In return, it seems Xi has promised that Chinese companies will buy more US farm products, starting soon and not waiting for a larger US\u2013China deal\u2014a savvy move that plays to Trump\u2019s base and ego.<\/p>\n

What this tells us is that the big outcome Trump seeks from Beijing is cash\u2014for farmers and US companies. In his words again: \u2018Buying American product is very important to me. It\u2019s a big\u2014it\u2019s a big thing.\u2019 He mentions national security, but his brain is focused on the dollars, his base and probably the 2020 election.<\/p>\n

For now, then, we have a \u2018deal\u2019 for resuming talks that trades US relaxation of pressure on China\u2019s tech sector for Beijing forcing Chinese companies to buy more US farm produce (and presumably less from other suppliers\u2014like Australian farmers).<\/p>\n

If that were to be a harbinger of any final deal Trump strikes with Xi, then you\u2019d have to wonder why he bothered with confrontation, because the future of US strategic and economic power is not soybeans, but technology.<\/p>\n

It\u2019s not just Huawei that has been parked until later. The deep disconnect yet to be bridged is the one on trade between Trump\u2019s \u2018gut\u2019 and the views of his key advisers. The assessment of much of Congress and corporate America is that the US is in deep strategic, economic and technological competition with the Chinese state.<\/p>\n

It\u2019s possible that months from now Trump will sign a very big, very great, beautiful deal that only he could have made, but that makes no progress on changes to the fundamental structural policies and practices of Xi\u2019s party-state.<\/p>\n

If that happened, stock markets around the world would probably get a bounce, and other G20 leaders would congratulate Xi and Trump for listening to their calls to not harm broader global economics with their bilateral troubles. It\u2019d be a dead cat bounce though, because if Xi\u2019s signature policies like \u2018Made in China 2025\u2019 persist, then Trump, or any other US president, will find themselves back where Trump started, but with less credibility in taking on Xi a second time.<\/p>\n

Beyond the art of the deal, a deeper disconnect was on display in Osaka. This one has to do with the World Trade Organization\u2019s future. Reform was on the agenda. Again, the root cause of the need for reform lies in longstanding policies and practices of the Chinese state, accelerated by Xi who sensed China\u2019s moment when he became president.<\/p>\n

At its most basic, the WTO problem is that China joined the organisation in late 2001 as a developing economy and has taken single-minded advantage of this as its economy has changed.<\/p>\n

Back in September 2001, the Chinese leadership \u2018agreed<\/a> to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules.\u2019 That didn\u2019t happen.<\/p>\n

Instead, the Chinese state used the preferential rules for developing countries and ruthlessly slow-rolled and distorted moves to liberalise and open key sectors of its economy. Huawei and other Chinese \u2018national champions\u2019 rose and operate now through these distortions.<\/p>\n

Russia and China aside, almost every G20 country agrees that WTO reform must address these practices and recognise that China, despite major social inequality, now exhibits the features of a developed economy.<\/p>\n

The most the G20 can agree to<\/a> is reaffirming \u2018support for the necessary reform of the World Trade Organization to improve its functions\u2019. There\u2019s no timeframe and no agreement on what those reforms should be.<\/p>\n

On the tech sector, which is heartland stuff for US and Chinese competition, the multilateral news is worse.<\/p>\n

Some choice bits<\/a> from the G20 leaders\u2019 communiqu\u00e9 have a distinct post-modern flavour:<\/p>\n

To further promote innovation in the digital economy, we support the sharing of good practices on effective policy and regulatory approaches and frameworks that are innovative as well as agile, flexible, and adapted to the digital era, including through the use of regulatory sandboxes \u2026 We affirm the importance of protection of intellectual property. Along with the rapid expansion of emerging technologies including the Internet of Things (IoT), the value of an ongoing discussion on security in the digital economy is growing.<\/p><\/blockquote>\n

Agile \u2018regulatory sandboxes\u2019 and an \u2018ongoing discussion\u2019 aren\u2019t phrases that inspire much confidence.<\/p>\n

The Osaka summit shows that for multilateralism to work, someone still needs to drive the agenda. So far, no leader is stepping forward with any vision beyond calming the markets, urging the US and China to \u2018resolve their trade dispute\u2019, and saying that Trump and Xi understand the merits of this<\/a> for everyone. Their arm-wrestle affects everyone, but it\u2019s not about<\/em> everyone. It\u2019s about their own power and roles in the world.<\/p>\n

In a pre-G20 speech<\/a>, Prime Minister Scott Morrison came closest to the core issues when he said, \u2018It is now evident that the US believes that the rule-based trading system\u2014in its current form\u2014is not capable of dealing with China\u2019s economic structure and policy practices.\u2019 He added that the \u2018current trading system seems incapable of acknowledging, let alone resolving, these issues\u2019.<\/p>\n

It\u2019s a good diagnosis, but it\u2019s no prescription. And there\u2019s no mention of the key ingredient: sustained international pressure leading to verifiable policy and behavioural changes in Beijing.<\/p>\n

Of course, any such agenda will be very uncomfortable for Beijing, and G20 members will need to make a concerted effort to shift China\u2019s ways.<\/p>\n

Sadly, it seems that our best hope for resolving the core international distortions and problems resulting from Xi Jinping\u2019s drive for global power is Donald Trump.<\/p>\n","protected":false},"excerpt":{"rendered":"

At the weekend\u2019s G20 meeting in Osaka, US President Donald Trump and his Chinese counterpart, Xi Jinping, agreed that their countries would resume economic and trade negotiations. Trump also said US companies could resume sales …<\/p>\n","protected":false},"author":766,"featured_media":48781,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[1428,672,2228,2380,1207,204],"class_list":["post-48777","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-donald-trump","tag-g20","tag-trade-war","tag-us-china-relations","tag-wto","tag-xi-jinping"],"acf":[],"yoast_head":"\nTrade war truce trumps multilateral concerns at G20 | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/trade-war-truce-trumps-multilateral-concerns-at-g20\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trade war truce trumps multilateral concerns at G20 | The Strategist\" \/>\n<meta property=\"og:description\" content=\"At the weekend\u2019s G20 meeting in Osaka, US President Donald Trump and his Chinese counterpart, Xi Jinping, agreed that their countries would resume economic and trade negotiations. 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