” President Donald Trump’s Economy Plus vs Impeachment Minus ” – January 15, 2020.
1. US-China Trade Deal :
First Phase of the Trade Deal with China has been crystallised on January 15, 2020, to be marked with a Whitestone in President Donald Trump’s first term.
President Donald Trump claims, ” it is a momentous step … … … to a future of fair and reciprocal trade”.
2. The Trade Agreement has been signed by President Donald Trump and Chinese Vice Premier Liu He in the White House.
3. The Trade Deal covered :
Expansion of American agriculture ; IP protection and enforcement ; Removing barriers to American Financial Services ; Rebalancing the US-CHINA trade relationship ; Effective Dispute Resolution.
China will submit an action plan to strengthen IP protection within 30 days of agreement taking effect. This will cover “measures that China will take to implement its obligations” and the “date by which each measure will go into effect”.
Technology transfers should be based on market terms that are voluntary and reflect mutual agreement.
Companies should be able to operate “without any force or pressure from other party to transfer their Technology to persons of the other party”.
China will take measures to root out the sale of counterfeit goods.
Chinese market access to US financial services firms will get a boost.
President Donald Trump revoked his earlier decision to label China as currency manipulator.
4. Time taken for the Trade Deal to effect :
It took 18 months (660 days) and 13 rounds of high level negotiations prior to this deal.
US dropped its plans of new tariffs on $ 160 billion in Chinese imports. It also cut tariffs on $ 110 billion in half to 7.5 %.
5. Second Phase of the Deal :
The second phase of the deal is expected to begin only after the November Election. Until then, punitive tariffs on China will stay. (Tariffs on $ 360 billion of Chinese goods).
Principle of equality and mutual respect was the guiding force behind the phase I deal. Phase 1 of the deal commits China to buy $ 200 billion worth of goods (agriculture, manufacturing, and services) from the US in the next two years. We may remember that President Donald Trump wanted China to reduce trade deficit in 2018.
Phase 2 of the deal is expected to roll back more tariffs and it may be christened 2A, 2B, and 2C .. .. ..
Focus on enforcement of the Phase 1 of the deal is the primary focus now – hold the US officials.
Salient Observations from a common man :
1. Even as the door of ‘impeachment’ threatened to close for President Donald Trump, the door of ‘economy’ opened welcoming him into the group of Leaders respected for high level performance.
2. The First Phase of US-CHINA deal, and the ratification of USMCA are the twin gains that Donald Trump recorded enabling him to cross his thorn laden Political Street with eclat.
3. In management parlance this can be taken to represent : (a) his tenacity of will ; (b) his ability to stay resolute ; (c) his ability to hold his strong’hold with aplomb ; (d) his effectiveness of execution ; and (e) his professional competence with skill. Management analysts and students have a good topic on hand to discuss and discept in their classes.
4. The Phase 1 of the deal is a firm step on the rungs of the ladder of easing the on-going trade war, giving the right direction.
5. President Donald Trump’s team of negotiators (cheerleaders) ‘connected, communicated, and collaborated’ with their counterparts in China and celebrations, if any, are only fitting. Ability to connect authentically with the other party’s thoughts and feelings in order to motivate and inspire them toward a deserved outcome – is a mark of Leadership.
6. The pessimism, if any, shrouding the markets with the possibility of slow economic growth may well be dispelled, atleast temporarily.
7. In keeping/fulfilling one of his promises, President Donald Trump must have built and elevated the “trust” of his supporters and possibly earned many other supporters too. His commitment is stronger than the real benefits that are likely to accrue to the people in the short-term. It, nevertheless, is a timely ‘win’ with a concrete ascension to the overall relations with China.
Something seems to be missing in this deal. We still do not know the specifics clearly (in terms of statistics and cost benefits). The optimism portrayed now may just vanish if the details do not support a clear advantage to the US Citizens. That may well be a great disappointment. The process, nevertheless, has started signalling the existent choices and chances which comprise the big hope that it will be consummated “favourably”. Hail Leadership.
“Dieu avec nous”
Thursday, January 16, 2020 – 6.19 p.m. (IST).
Tidbit : ” The Phase 1 of the US-CHINA deal is expected to set in motion a “new cycle of relationship” “. – President Donald Trump.