This is the first TTALK Quote from GBD's event last week on U.S.-China Trade. There are likely to be several more, notwithstanding how dramatically the ground has shifted in this past week. The event was held on Tuesday, June 11. The title was "Grading the U.S.-China Midterm: Guidelines for Evaluating a U.S. China Trade Agreement," and on June 11 such a title seemed almost heroic. The U.S.-China trade talks had broken down a month earlier, and no one knew whether there was any real hope of things getting back on track, of the negotiations starting up again, before the current difficulties became much, much worse. But a week is a long time in trade as well as politics, and things are different today than they were two days ago. Today's headlines have confirmed yesterday's Presidential tweet: "Trump, Xi Plan Trade Talks at G-20." That's the headline for the first story in today's Wall Street Journal. The G-20, which has its own agenda, is scheduled for June 28 and 29 in Osaka.
Encouraging as the Trump-Xi dialogue may appear, the trade negotiations have not yet formally resumed, and they have certainly not concluded. Omens are not outcomes. The hard truth is no one knows how all of this will play out. In that sense today is not much different from last Tuesday.
The event was coming to a close when Doug Palmer of Politico asked a provocative question. Alas, his question was out before the microphone got to him. So, we don't have a verbatim transcript, but the essence of the question was this:
Wouldn't the Chinese be better off in simply not negotiating with the Trump Administration? After all, the U.S. election is now just 18 months away. The Chinese could simply wait.
Nick Giordano of the National Pork Producers Council rejected the implicit suggestion of that question. Here is what he said:
NICK GIORDANO
I want to spring back to Doug's question, which is, is it in China's best interest to drag this out? I don't think it's in anybody's best interest. I think that none of us in this room know who the next president of the United States will be. The Chinese certainly don't know that. You can't assume [that] if it's somebody other than Donald Trump that they are going to have a different position. And, you know, when you think about the damage that can be done to both economies - not just to hog farmers, not just to agriculture - I think it's imperative that they reach a deal. And you know, it's always darkest before the dawn. So, we are trying to be optimistic here.
The other speaker to clearly address Doug Palmer's question was Wendy Cutler. Now the head of the Washington office of the Asia Society Policy Institute, Ms. Cutler is a seasoned USTR negotiator with major agreements to her credit. She did not dismiss Mr. Palmer's question out of hand but talked about the debate in Beijing about the wisdom of trying to seek a deal with the United States. She said there are influential people in both Beijing and Washington arguing against a deal. Describing the situation in China she said:
WENDY CUTLER
I think certain factions in China and certain senior officials are arguing that maybe we [China] are better off with no deal with the United States. As Doug said, why give Trump a victory?
Second, they are probably looking at what happened over the past week on Mexico's tariffs and thinking, well, even if we do a deal with the United States, there's really no sanctuary here. What kind of guarantees do we get that he won't then go ahead and threaten tariffs on an unrelated issue?
Those points, however, were but a fragment of her analysis and not at all her conclusion. She talked as well about the premium in Beijing for effectively managing the relationship with the United States and the damage being done to the Chinese economy by the current impasse. She is clearly hoping for a deal. She said so:
I think it's in both countries' interests to get back to the table, do the best deal they can, and, you know, try and manage this relationship and get things back on track.
Fittingly, Ms. Cutler's final comment of the day pointed to the G-20 Summit in Osaka when she said:
I just would kind of conclude by saying that all eyes now need to be on the G20. I think this is going to be the last opportunity for quite a while for both leaders to sit down.
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