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TWN
Info Service on WTO and Trade Issues (Nov25/01) Geneva, 31 Oct (D. Ravi Kanth) — United States President Donald Trump described the one-year trade truce reached with China in Busan, South Korea, on 30 October as an agreement between “two very large, powerful countries,” insisting that he would rate it as “twelve on a scale of one to ten.” “But overall, I guess on the scale from zero to ten, with ten being the best, I would say the meeting was a twelve,” he told reporters while returning home. In sharp contrast, China’s President Xi Jinping maintained that “China and the US should be partners and friends. That is what history has taught us and what reality needs.” President Xi’s remarks carried powerful messages. “You and I are at the helm of China-US relations,” the Chinese President said. “In the face of winds, waves, and challenges, we should stay the right course, navigate through a complex landscape, and ensure the steady sailing forward of the giant ship of China-US relations,” President Xi said, with an underlying note of a new worldview. The trade truce between the US and China will take effect immediately for one year and may be extended thereafter. Although the details of the agreement remain somewhat hazy at this juncture, President Trump indicated that the overall tariff on Chinese goods entering the American market will be reduced to around 47 percent from the prevailing 57 percent – on account of a 10-percentage-point reduction in the fentanyl-related tariff, which had been 20 percent. China, according to President Trump, has agreed to buy substantial quantities of soybeans from the US, which would rescue American farmers currently suffering from a severe export drought due to a lack of purchases from China. The two sides also reached an agreement on the supply of critical minerals by China, which had been slated for export sanctions previously announced by Beijing. China, in turn, will be able to access several categories of advanced chips from Nvidia, depending on whether the tech giant, whose market valuation has hit a record $5 trillion, receives approval to finalize sales of the advanced chips. The US is expected to scrap the hefty port servicing charges for Chinese maritime shipping companies docking at American ports. In return, China will also drop corresponding charges on American shipping companies. BIPOLAR TRADE ORDER President Trump somewhat unwittingly revealed the emergence of a bipolar trade order. “It was a good meeting for two very large, powerful countries. And that’s the way we should get along with a large, powerful (country),” President Trump noted. In a post on his social media website Truth Social that appeared as his aircraft took off from Busan, President Trump issued several rather exclamatory remarks. “I had a truly great meeting with President Xi of China,” he wrote, noting that “there is enormous respect between our two Countries, and that will only be enhanced with what just took place.” Without revealing any details, President Trump said, “We agreed on many things, with others – even of high importance – being very close to resolved.” The US President said that he “was extremely honored by the fact that President Xi authorized China to begin the purchase of massive amounts of soybeans, sorghum, and other farm products.” He claimed that American “farmers will be very happy! In fact, as I said once before during my first Administration, farmers should immediately go out and buy more land and larger tractors,” while thanking “President Xi for this!” “Additionally,” said President Trump, “China has agreed to continue the flow of rare earths, critical minerals, magnets, etc., openly and freely.” On the allegedly illegal supply of fentanyl from China, President Trump said, “Very significantly, China has strongly stated that they will work diligently with us to stop the flow of fentanyl into our country.” He expressed confidence in the Chinese leadership to “help us end the fentanyl crisis.” Besides, according to President Trump, “China also agreed that they will begin the process of purchasing American energy” – a statement that seemed somewhat odd when contrasted with China’s large-scale construction of nuclear reactors. According to a recent report in The New York Times, China is on the verge of becoming a global leader in building new nuclear reactors while maintaining its position as a champion of renewable energy. President Trump claimed that “a very large-scale transaction may take place concerning the purchase of oil and gas from the Great State of Alaska,” saying that “Chris Wright, Doug Burgum, and our respective energy teams will be meeting to see if such an energy deal can be worked out.” President Trump stressed that “the agreements reached today will deliver prosperity and security to millions of Americans.” “After this historic trip to Asia,” President Trump said, “I am now heading back to Washington, D.C. I want to thank the great countries of Malaysia, Japan, and South Korea for being so generous, gracious, and hospitable – also Australia, Canada, New Zealand, Singapore, Thailand, and Vietnam, who were at the dinner last night hosted by His Excellency Lee Jae-myung [President of South Korea].” “Hundreds of billions of dollars are being brought into our country because of them,” President Trump said. Later, speaking to the media who accompanied him aboard Air Force One, President Trump said an “outstanding group” of decisions had been reached. Without quantifying the number of decisions reached with China, President Trump said: “A lot of decisions were made too. There wasn’t too much left out there. And we’ve come to conclusions on many very important points, and we’ll be handing that to you in a little while.” He clarified that “it was a lot of different things, many of them very important.” However, a clear record of these decisions has yet to be made public. Claiming that China has already started purchasing soybeans and other goods “in very large quantities,” President Trump said his Chinese counterpart “is gonna work very hard on it, precursors, and I think you’re gonna see some real action taken.” He revealed that he has “agreed – as you know, I put a 20% tariff on China because of the fentanyl coming in, which is a big tariff. And based on his statements today, I reduced it by 10%, so it’s 10% instead of 20%, effective immediately. I believe he’s gonna work very hard to stop the death that’s coming in.” On China’s demand for the US to lift sanctions on the sale of advanced chips manufactured by US companies, President Trump said: “We did discuss chips, and he’s going to be talking to Nvidia and others about taking chips.” President Trump said: “Look, we make great chips, and Nvidia is the leader, and I’ll be speaking to Jensen [the chief executive] from Nvidia, but they’re gonna be discussing that with Nvidia to see whether or not they can do it. I said that’s really between you and Nvidia, but we’re sort of the arbitrator or the referee.” In response to questions about the sale of the downgraded Blackwell chip: “We’re not talking about the Blackwell [advanced chips] that just came out yesterday,” he told reporters. Clarifying President Trump’s remarks, the United States Trade Representative (USTR), Ambassador Jamieson Greer, told reporters that “the president was saying there are so many chips we’ve already sent to China – lots of advanced chips … and as he said, you know, Nvidia will talk to China and see what’s possible.” The USTR insisted that the Blackwell chips “of course, weren’t discussed,” adding that “we focused on China’s export controls on rare earths, and they’re going to keep those flowing, which is really important.” When asked how soon the final deal with all the details would be unveiled, President Trump said: “Well, I think pretty soon. We don’t have too many major stumbling blocks. We have a deal. Now, every year we’ll renegotiate the deal, but I think the deal will go on for a long time – long beyond the year. We’ll negotiate at the end of a year, but all of the rare earth issues have been settled.” With the US having imposed several sanctions on Chinese investments in American start-up companies, President Trump was asked about Chinese investments in the American market. “Well, they have investments and they will invest, and China – you know, I think they feel very strongly – they congratulated me on the tremendous success that we’ve had.” According to the US President, “There’s never been a country that has had so much money come into it for purposes of investment – for building, for auto plants, for AI, etc.” CHINA REMAINS CIRCUMSPECT In sharp contrast to some of President Trump’s remarks, Chinese President Xi’s comments seemed more nuanced. President Xi said that there is good momentum in China’s economic development, adding that in the first three quarters of this year, China’s economy grew by 5.2 percent, and import and export trade in goods with the rest of the world expanded by 4 percent, according to a report in China’s Global Times. “This is not an easy accomplishment given the domestic and external difficulties,” President Xi noted, adding that the Chinese economy is like a vast ocean – big, resilient, and promising. “We have the confidence and capability to navigate all kinds of risks and challenges,” President Xi said, in a subtle hint that China can withstand any unilateral measures imposed by the US. At its fourth plenary session, the 20th CPC Central Committee deliberated over and adopted recommendations for the economic and social development plan over the next five years, President Xi said, according to the Global Times report. “Over the past seven decades and more, we have been working from generation to generation on the same blueprint to make it a reality. We have no intention to challenge or supplant anyone. Our focus has always been on managing China’s own affairs well, improving ourselves, and sharing development opportunities with all countries across the world,” he added. President Xi noted that the two countries’ economic and trade teams had an in-depth exchange of views on important economic and trade issues and reached consensus on solving various issues. According to the Global Times, President Xi called on the two teams to work out and finalize follow-up steps as soon as possible and ensure that common understandings are effectively upheld and implemented – to inject confidence into the two countries as well as the global economy through solid deliverables. China-US economic and trade relations have experienced ups and downs recently, and this has also given the two sides some insights, President Xi noted. The business relationship, he said, should continue to serve as the anchor and driving force for China-US relations – not a stumbling block or a point of friction, according to the Global Times. The two sides should think big and recognize the long-term benefits of cooperation, and must not fall into a vicious cycle of mutual retaliation, President Xi added, calling on the two teams to continue their talks in the spirit of equality, mutual respect, and mutual benefit – and to continuously shorten the list of problems and lengthen the list of cooperation. “Dialogue is better than confrontation,” President Xi said, adding that China and the United States should maintain communication through various channels and at various levels to enhance mutual understanding. There is good potential for the two countries to work together on combating illegal immigration and telecom fraud, anti-money laundering, artificial intelligence, and responding to infectious diseases, he added. The competent departments should strengthen dialogue and exchanges and carry out mutually beneficial cooperation, President Xi said, adding that the two countries should also engage in positive interactions on regional and international platforms, according to the Global Times. “The world today is confronted with many tough problems. China and the United States can jointly shoulder our responsibility as major countries and work together to accomplish more great and concrete things for the good of our two countries and the whole world,” he added. According to various assessments provided by China experts, Beijing had gained the upper hand in the negotiations, according to a report in the Financial Times on 30 October. “Xi stared down Trump and Trump blinked,” said Scott Kennedy, a China expert at Washington’s Center for Strategic and International Studies. “This truce is positive for now, but we should all expect tensions to escalate in the future,” said Wendy Cutler, a former US trade negotiator now at the Asia Society Policy Institute in Washington, according to a report in The Wall Street Journal on 30 October. +
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