How Long Is the Road to a Deal With China?
MAY 14, 2019 12:56 PM
By Anna-Lisa Laca
Farm Journal’s Milk
online and Business Editor
For the last few days, weeks and months, we’ve all been teased with the chance of a nearly done deal between the U.S. and China. But we continue to hit new bumps in the proverbial road to agreement. This past week is no different, and analysts warn it could be a very long time before this trade tit for tat is in the rearview mirror.
“The deal obviously has taken a turn for the worse in the last week or so,” John Gilliand of Gilliland and McKinney International Counselors told AgDay host Clinton Griffiths. “I think it caught some people by surprise. But frankly in Washington, we’ve known that this was really the beginning of a longer process.”
In any negotiation, there are ups and downs. Gilliand, whose D.C.-based law and policy firm specializes in international trade, agriculture, and international policy issues, expected some blow ups, particularly because of the negotiating dynamic with China.
“We’re in a down right now, but we’re at the negotiating table,” he said. “So as long as they’re at the table, there’s reason for optimism.”
What’s next? Gilliand expects negotiators to continue working toward an agreement during the next month.
“I don’t necessarily expect a deal in the next month, even though Trump and Xi will see each other at the G20 later in June. We may not have a deal until then. Frankly, I personally don’t expect one,” he said. “I should caveat that it’s hard to know what to expect in this type of negotiation.”
David Salmonsen, senior director of congressional relations for the American Farm Bureau Federation, predicts the deal will unravel overtime. By that he means several agreements on specific areas could be reached over a long period of time.
“We can do a deal with China that has to do with walking back tariffs and doing purchases, and I think they can agree with that fairly quickly,” Salmonsen told Griffiths. “Maybe some things on the major substantive issues. But we’ve got a lot of different issues with China, and some of them are going to have to wait and be the product of more negotiations. But certainly, I think there is a deal to be had now, it may not be the complete deal, but it’ll be an initial go at it.”
Continued progress is why Salmonsen thinks the Trump Administration is pushing so hard to keep the tariffs in place. Which some say is what caused the most recent disagreement and implementation of additional tariffs. Additionally, enforcement continues to be a sticking point. Previous presidents have successfully negotiated agreements with China, the difference is the mechanics of those deals were never enforced. President Trump’s administration is honed in on enforcement mechanisms.
“This administration can reach an agreement as quickly as they started off this trade dispute. So anything is possible. But I think that whether we have an agreement on paper is different than whether we have enforcement in fact,” Gilliand said.
Signals point to the possibility of a resolution soon, Salmonsen said.
“There are some thorny issues, but if you read all the accounts and what we hear they were close,” he said. “Now they’ve got to get to the end.”
Still, if an agreement isn’t done before the summer, Gilliand said, this trade spat could go on for another year.
“Once we get into the summer, if there’s not a deal by the end of June, we may expect this thing to drag on,” he said. “I think we’re in for a long-term status with China. This is the new terms of trade, whether they’re on paper or not. This is what we should get used to.”