As Washington and Beijing consider a latest mechanism to adjust trade between the world’s two largest economies, some analysts warn it could interfere with market forces, while others view it as a potential path to smoother coexistence.
What is a ‘Board of Trade’?
Following talks between top US and Chinese economic officials in Paris last weekend, US trade envoy Jamieson Greer stated that both sides discussed creating a “US-China Board of Trade.”
The board would aim to formalize and identify goods the United States should be exporting to and importing from China, according to Greer. Wendy Cutler of the Asia Society Policy Institute added that the board could explore opportunities for expanding trade in non-sensitive products or discuss mutual tariff reductions in non-strategic sectors.
Officials have reportedly made progress toward Chinese purchase commitments for agriculture, energy, and planes from the United States, Cutler, a former US trade official, noted.
Is this new to US-China ties?
The talks are occurring as Washington explores “managed trade,” which Chad Bown of the Peterson Institute for International Economics described as focusing on outcomes rather than policies. This could involve import commitments or voluntary export restraints, similar to agreements made with Japan in the 1980s regarding automobile imports.
A recent example of this approach is the “Phase One” deal signed during a previous Trump administration, which aimed to de-escalate a trade war. Under that agreement, China committed to importing an additional $200 billion in US products over two years – a commitment that ultimately went unmet, according to Bown.
Why has this sparked worry?
Joerg Wuttke, a partner at DGA-Albright Stonebridge Group, expressed concern that this approach would be overly mechanized, stating, “Instead of taking regulations out, tariffs down, and making it easier for customers and companies to decide what they sell at what prices, it (would be) more mechanized.” He questioned, “Where are the market forces?”
A US-based business leader, speaking anonymously, raised concerns about how Washington would prioritize industries and determine which sectors would benefit from such a managed trade approach.
Does it help the relationship?
Bown of PIIE believes a managed trade agreement could prove more successful than previous attempts to resolve economic conflicts. He suggested the question is whether it leads to “a more sustainable, longer-term relationship” compared to “a constant back and forth of conflict.”
“It’s clear the old system didn’t perform. Could we try a new system that might work?” he said, adding that any agreement would require a sincere commitment from both sides and would still be “really, really hard.”
Frequently Asked Questions
What is the purpose of a US-China Board of Trade?
The board would help to formalize and identify what kinds of goods the United States should be exporting to and importing from China, according to US trade envoy Jamieson Greer.
Has the US tried a similar approach with China before?
Yes, the “Phase One” deal signed during a previous Trump administration involved commitments from China to increase purchases of US products, though those commitments were not fully met, according to Chad Bown of PIIE.
What are some concerns about this new approach to trade?
Some analysts, like Joerg Wuttke, worry that a managed trade approach could interfere with market forces and reduce competitiveness.
Will this new approach to trade between the US and China lead to a more stable economic relationship?
