In recent days, an Official close to the US-China trade negotiations was quoted as saying a phase 1 agreement was ‘millimetres away’. Even more recently a potential obstacle to progress arose as a result of Congress passing the Hong Kong Rights and Democracy Act. So where does that leave matters and what does it illustrate?
Previous blogs have reported the development of this trade spat and tried to place it into context:
‘US and China – Trading Blows’
‘Tariff Uncertainties – A Hot Topic Gets More Heated’
Speculation in the media suggests a potential phase 1 might include elements like:
- A commitment by China to purchase a significant value of US agricultural goods;
- A roll-back of tariffs previously implemented or imminently due for implementation;
- An opening up of the Chinese financial services sector and enhanced intellectual property protections.
However, there are challenging political and strategic goals and imperatives underpinning the dispute and indeed many trade negotiations. The US is being more assertive about trade issues and perceived abuses. China has domestic structural issues that are unlikely to change overnight. So progress will, at best, be gradual and fraught. Even if successful phase 1 will be limited in scope, with more material issues postponed to a phase 2 or 3.
All of which brings to mind the famous Chinese proverb: ‘a journey of a thousand miles begins with a single step’. It is encouraging there is a political will to make progress on knotty issues, but we should not hold our breath in anticipation of rapid progress. A principle that can wisely be applied to many trade negotiations and no doubt one we will return to in one form or another next year!