The biggest points in the 10-point plan are aimed at the American agriculture and financial sectors, which are being promised greater access in a range of areas. In addition to beef, China agreed to accelerate the process for approving U.S. biotechnology products. Beyond electronic payments, Beijing also said it would grant more access to U.S. credit ratings firms and bond underwriters.
In return, the U.S. promised it would remove obstacles to importing Chinese poultry meat and pledged that it “welcomes direct investment by Chinese entrepreneurs.”
Commerce Secretary Wilbur Ross was ecstatic.
“U.S.-China relationships are now hitting a new high especially in trade,” Ross said in unveiling the package at the White House.
But this is far from a done deal. It's a
Trumpian type announcement before an actual deal is in place.
The Wall Street Journal notes:
While the Trump administration hailed the measures as breakthroughs, many of them were related to sectors where U.S. negotiators have repeatedly over the years claimed progress in entering China’s market, only to get stymied by new roadblocks.Indeed sentence one of step one of the joint release states (my highlight):
Following one more round of technical consultations between the United States and China, China is to allow imports of U.S. beef on conditions consistent with international food safety and animal health standards and consistent with the 1999 Agricultural Cooperation Agreement, beginning as soon as possible but no later than July 16, 2017.The U.S. Chamber of Commerce issued a lukewarm statement in response to the plan, saying it is “hopefully ensuring full and timely implementation of commitments China has already made,” adding that “the real work lies ahead, though,” reports The Journal.\
The Financial Times notes:
Some of those Chinese pledges echo ones made in the past. Beijing promised to open up its electronic payments industry when it joined the World Trade Organisation in 2001 and lost a related 2012 case about its failure to do so. More importantly, over the 16 years since it joined the WTO it has established a state-owned monopoly over the electronic payments market.
The curious non-deal deal joint US-China announcement appears to be for the benefit of verbal support for an upcoming summit put together by Chinese President Xi Jinping.
The Journal again:
One factor that appeared to be driving the timing of the announcement was Mr. Xi’s upcoming “One Belt One Road” summit, which is aimed at reviving the Silk Road trading route. The announcement included a statement that the U.S. “recognizes the importance” of the initiative.
While some countries are sending heads of state, the U.S. had originally planned to send a low-level Commerce Department official, but now plans to send Matthew Pottinger, the White House’s top Asia expert, according to a person familiar with the matter.More open trade is always a plus, but the devil is always in the details and the details aren't hashed out on this deal yet. And bizarrely, Secretary Ross simultaneously told Reuters this week that the U.S. semiconductor industry is still dominant globally but said he is worried that it will be threatened by China’s planned investment binge to build up its own chipmaking industry.
Ross told Reuters in the interview that his agency is considering a national security review of semiconductors under a 1962 trade law because of their “huge defense implications” including their use in military hardware and proliferation in devices throughout the economy.
He has launched similar "Section 232" reviews of the U.S. steel and aluminum sectors, where a flood of imports especially from China have entered the country.
"Semiconductors are one of our shining industries, but they have gone from substantial surplus to the beginnings of a deficit," Ross told Reuters. "China has a $150 billion program to take that much further between now and 2025. That is scary."
Ross added that while he understands Beijing's logic in developing its domestic chip industry, "that’s going to be a struggle" from a U.S. trade standpoint.
Sounds to me like protectionism for crony friends of the administration.
Only time will tell what is going on here but free trade can be launched with one sentence: "Let the products and services flow."
No "negotiations" needed.
-RW
UPDATE
Here's DJT's take on the not completed deal/
China just agreed that the U.S. will be allowed to sell beef, and other major products, into China once again. This is REAL news!— Donald J. Trump (@realDonaldTrump) May 12, 2017
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