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White House Says Phase 1 Of Trade Deal With China Is A Big Win

NOEL KING, HOST:

The Trump administration says phase one of a trade deal with China is secured; it is done. We don't yet know everything that's in the deal, but the president said China has agreed to make massive purchases of U.S. agricultural products. U.S. Trade Representative Robert Lighthizer told CBS' "Face The Nation" on Sunday that the deal will nearly double U.S. exports to China over the next two years.

(SOUNDBITE OF TV SHOW, "FACE THE NATION")

ROBERT LIGHTHIZER: Here's what's in writing. We have a list that will go - manufacturing, agriculture, services, energy and the like. There'll be a total for each one of those. Overall, it's a minimum of $200 billion. Keep in mind, by the second year, we will just about double exports of goods to China if this agreement is in place.

KING: So the administration is characterizing this as a big win. But is it? Robert Daly of the Wilson Center is here in studio with me. He's a scholar on U.S.-China relations, and he also served as a U.S. diplomat in Beijing. Good morning.

ROBERT DALY: Good morning.

KING: All right, so President Trump said from the beginning that he wanted China to change the way it does business with the United States. He wanted big structural changes to the way it deals with IP, intellectual property, technology transfer. Does this agreement do that?

DALY: This agreement doesn't treat any of those big structural issues, including intellectual property and the question of Chinese government support to state-owned enterprises. We're not there yet.

KING: So what does this deal do?

DALY: In this deal, China has agreed to buy more from the United States - agricultural products, but other other products as well. The exact numbers are somewhat in debate. The U.S. administration is saying $40 to $50 billion annually total in agricultural products. China is indicating it's more like $32 billion. So there's some disagreement there.

And in exchange for more purchases, China gets some rollback of American tariffs. There are still tariffs in place. But about $120 billion in Chinese exports that were tariffed in September - the tariff on those will go from 15% to 7.5% Then there was another tranche of tariffs that was to have gone into effect over the weekend on $160 billion in Chinese imports. Those have been postponed.

KING: Why did this deal happen now?

DALY: It happened, I think, largely for political reasons on the American side, reasons that were well understood by China and therefore gave it more leverage. On October 8, Larry Kudlow - Lawrence Kudlow, who is the director of the White House Economic Council - had a meeting with President Trump at which he brought in some outside economists who explained that going down the path of imposing all scheduled tariffs might be recessionary, and it would also make the costs to American consumers undeniably clear in a way that could have an impact on his reelection chances in 2020.

And it appears that from the time of that meeting in early October, the administration was go, go, go - wanted something that could be called a deal. And it also worked out well such that last week it could be engineered to coincide with the passage of the USMCA, the NAFTA 2 deal between the United States, Canada and Mexico. So in the week in which the articles of impeachment went forward, President Trump was also able to present himself as a great dealmaker.

KING: Two big wins, so to speak, on trade. I mean, a question that seems worth asking, given that economists came in and told the president, like, listen, this is hurting people; it's going to hurt people - could we have had the same deal with China 12 months ago?

DALY: There's considerable evidence that we could have. China made an offer to purchase a comparable amount of agricultural products back in 2018. So with this deal, we have to ask, what's in it? We don't really know yet. And there's disagreement. Chinese leaders have announced in China that the United States has already agreed to gradually eliminate all tariffs that came on as part of the trade war. Ambassador Lighthizer has said, no, there's no such agreement. So both sides are telling domestic audiences what they want to hear.

KING: OK.

DALY: So what's in it, what will China actually do, and what would China have done anyway - because China continues to reform its economy.

KING: We talked to Texas Farm Bureau President Russell Boening, and here's what he said about this trade deal.

RUSSELL BOENING: It should just help the price of our commodities. The jury's still out on how much. Roughly 30% of farm income is from exports in the United States. So anytime you have someone as big a player as China that gets back in the market, tariffs are removed, it's just a good thing.

KING: It's just a good thing, he says, which for him, for agriculture producers, is true. But we should say, this trade war cost this country a lot over the past two or so years. Will this deal make up for that, by the numbers?

DALY: Well, certainly not in the first year. Americans have already paid $88 billion in tariffs, and those were paid by American importers and, in some cases, passed on to American families to the tune of about an average of $1,000 per family.

KING: Wow.

DALY: In addition to the $88 billion, we have paid American farmers $28 billion in subsidies to compensate for their losses. So this has been very costly, and we don't know where it moves going forward. The United States and China are still in a increasingly contentious relationship, and decoupling on the tech side on some commodities and possibly on the financial side is still ongoing. So this is a pause at best.

KING: Pause at best. Robert Daly of the Wilson Center. Thank you so much for being with us today.

DALY: Thank you. Transcript provided by NPR, Copyright NPR.

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