US-China Trade Deal: Winners and Losers
While the the new US-China trade agreement announced last week will likely benefit US agricultural exporters and financial institutions, some are disappointed that the initial report on the 100-day plan failed to deal with issues such as overcapacity, high technology, and market access for US companies.
The US beef industry is a clear winner under the US-China announcement. US beef has been banned in China since 2003 after a mad cow disease incident. It’s possible the Chinese were stalling on the beef issue until the US was ready to buy cooked poultry from China. The new plan provides that US beef can be exported to China after July 16 and that Chinese poultry exports will be accepted by the US “as soon as possible.”
US biotech companies have been trying unsuccessfully to get their genetically modified seeds approved by China’s Ministry of Agriculture. Under the new plan, China committed to make decisions on outstanding applications that eventually allow the sale of GMO seeds and potentially other US biotech products in China. Monsanto, DuPont, and Dow Chemical stand to benefit from China’s certifications of their products as safe.
US credit card companies, credit ratings agencies, and other financial institutions also received concessions under the agreement.
But critics say that the initial results of the 100-day action plan indicate that the Chinese government has shown it can out-maneuver the US government on bilateral trade issues.
“Rather than secure real concessions on the critical issues facing the U.S. economy, the plan instead opens up Chinese markets for some commodity-based and finance industries in return for giving China free rein to use its massive foreign reserves to buy up American companies in advanced industries,” said Robert Atkinson, president of the Information Technology and Innovation Foundation.
The agreement, according to Atkinson, leaves in place a status quo in which China’s “rampant practice of innovation mercantilism” deprives US companies of market share in advanced industries such as computing, semiconductors, aerospace, automobiles, internet services, clean energy, and cloud computing.
“Going forward, it will be important for the Trump administration to move beyond a simple focus on the trade balance to a focus on the kind of two-way trade with China that supports America’s competitive advantage in advanced, knowledge- and technology-based industries,” said Atkinson. “Without a significant course correction, China’s exports and economy will be made up of more higher-value-added advanced industries, while America’s exports and economy will become more focused on agriculture, natural resources, and finance, as its advanced industries wilt.”