After trade battles and negotiations for a fragile truce, Washington and Beijing are considering a new mechanism to regulate their commercial exchanges.
For some observers, this could distort fair competition. Others see it as a way to pave the way for a more peaceful coexistence between the world’s top two economic powers.
Here are some explanations on the ongoing work, ahead of a potential meeting between Presidents Donald Trump and Xi Jinping.
– What is it about? –
Following a meeting on March 15 and 16 between high-ranking American and Chinese economic officials in Paris, White House Trade Representative (USTR) Jamieson Greer mentioned the creation of a “Trade Committee” between the US and China.
According to him, this would be a hybrid mechanism to formalize and determine “what types of products” the United States should export to China and vice versa.
According to Wendy Cutler, Vice President of the Asia Society Policy Institute, this committee could assess the possibility of increasing trade in non-sensitive products or discussing a mutual reduction in tariffs in non-strategic sectors.
She notes that officials seem close to unlocking commitments from China for the purchase of agricultural products, energy, and aircraft.
– Is this new? –
Chad Bown, from the Peterson Institute for International Economics, sees this as a form of “regulated trade.”
He cites the example of Japan voluntarily slowing down its car exports to the United States in the 1980s.
More recently, during Donald Trump’s first term, Washington and Beijing had signed an agreement where China committed to importing more American products worth $200 billion over two years. This commitment did not materialize.
– Why does this raise concerns? –
“Instead of eliminating regulations, reducing tariffs, and allowing companies to more easily decide what to sell and at what price, the system would become more bureaucratic,” warns Joerg Wuttke of the consulting firm DGA-Albright Stonebridge Group.
“This is not a good sign,” he adds. “Where are the laws of the market?”
According to him, this approach could reduce competitiveness and annoy other countries.
An anonymous American business leader wonders: if the government controls trade, how will it choose priority companies and favored sectors?
– Will the relationship be better? –
According to Chad Bown, the new mechanism could be more successful than previous attempts to smooth out their trade disputes.
“It’s clear that the old system was not working. Could we try something else?” he suggests, emphasizing that a “more enduring relationship” is preferable to “conflicts that continually reignite.”
But for this to work, the agreement must be acceptable and realistic for each of the signatories.
“Both parties would need to truly commit,” he warns. “And even then, it will be really, really difficult.”
