China Trade Deal: A Truce Awakens?
N. P. R. and everyone it's Cardiff in Stacey. This is indicated from planet money and it is only Thursday or already Thursday depending on how you we I guess. Yeah Yeah I mean my only Thursday because it has been a pretty big economic week it really has namely trailer truce trade war. True say at ten times it's fast. It's happening baby later. Treat orders meaning the US and China have both signed a trade agreement or at least what is being called phase one of a trade agreement. Many of the details of the agreement are not yet public but US Trade Representative Robert Lighthizer announced. The deal had quote real teeth and it included included new agreements about intellectual property where China will agree to respect and honor the copyrights trademarks and patents of US companies. Some of the tariffs that have been put in place as against Chinese goods will be lowered and China will buy more. US stuff a lot more. US stuff actually more than two hundred billion dollars worth of soybeans. We airplanes natural gas and pork over the next two years. If it follows through today on the show tree deal truce what we know about the new deal the US assigned with China and what it could mean for the US economy support for NPR and the following message come from from navigator say goodbye to meetings that waste time and too low to meetings. Your team will love navigator Pairs beautiful agendas with automations for the busy work most leaders. I don't have time for try for free at navigator. Dot Com support also comes from fund rise innovating the way people can invest in Real Estate Fund arise makes it simple to build a portfolio of high quality real estate affordably visit fund rise dot com slash built and get your first six months of advisory fees waived the US trade deal with. China should mean that China will buy a lot more. US stuff over the next couple of years to talk about what this means for the US economy. We have Mary very lovely with us. She is a professor of economics at Syracuse University. Mary thank you for joining us. Oh you're welcome so there was a big trade deal signed. Yes I guess it's phase one of a big deal was phase. One of what we hope will be a big deal right so just to refresh. This came out of a an investigation. The trump administration undertook under. US law looking at Chinese practices related to intellectual the property and its treatment of trade secrets. cyber theft there was a whole bunch of things related to basically technology. Transfer technology analogy theft. Yeah what is the deal say about intellectual property with what changes I guess. China agree to make well. China will respect it. It has a provision four civil and criminal procedures if there are allegations You know those already existed. The question is how were they carried out out and one of the problems that American companies have faced is that sometimes at the provincial level. You know they're appealing to provincial courts when his actually provincial central government that owns the entity that they're claiming is stealing their intellectual property so one can see that. There's a little bit of a conflict of interest there. So you know they have been making changes and these are spelled out in some detail in the agreement and in the end if these types of of disputes can't be settled it would end up on the desk of the US trade representative and could result in the imposition of tariffs the other side. Say in this case the Chinese would be the able to quit the deal though and has this sort of self Death switch on it. Oh like this message. Will self destruct. Yeah I mean yeah so it would go. It could go all the way up. US as well. We're putting on Taras in the Chinese could say we're out if you don't mind just explaining kind of some of the details of the deal. It seemed pretty. I was surprised when yeah I read it like China's going to be buying a lot of. US stuff yes yes we. We've known all along that this was sort of the price that president trump wanted to extract for trade eight piece was a lot of purchases and There in four different areas which are very broad agriculture of course We know that the American farmers have really suffered Through the trade war so agricultural goods manufactured goods including aircraft energy products and services and energy energy products is like Mostly liquefied natural gas. Mostly not yes liquefied natural gas and services what a services well financial services so it could be a business services could be insurance it could be banking and other types of financial services and this is like I mean. This is a lot of a lot of purchases I mean it's an increase of two hundred billion dollars over two years China's GonNa buy two hundred billion more dollars worth of US stuff right over two years than it had before. I mean the sounds like an enormous amount. It's an increase of more than a third. Yeah we have to realize that. US exports to. China are less than that this year. Alone so third to fifty percent percent increase now. The Chinese side are in their statements about the agreement have qualified in say it's dependent on market conditions. So you know I I think China has to guard itself against the view that it's just you know basically being held hostage in its writing an open check but these these targets are pretty aggressive We don't know if the US can supply that much. Oh like there's concern that farmers won't be able to grow that much. Food Manufacturers won't be able to make that much furniture senator. Yes I mean. We're already our economies at a very low unemployment rate We're GONNA go full steam ahead but you know we're the workers going to come from. Where's the supply GONNA income from but China ironically enough has been insisting that these be done on market conditions and I think that China is trying to signal that they're trying to uphold hold their WTO obligations which is to treat? All you know all suppliers equally and so they're saying we're GONNA look at the quality we're going to look at the price we want. American agricultural cultural products to be competitively priced. So I think we have to see how this plays out now. They have two years. That's a long time this is not being codified in. US law so. I think that you know we're wondering how. How is this happening? And whether it will outlive president trump's administration so what does this mean for the US economy. What are some of the impacts the steel will have or looks like it might have? Yeah I mean we've heard a lot yesterday about how this is fantastic. I think you know the first thing is it is good for the US economy and it's good for the world economy. Now what is what do I mean by that One basic reason. We're we're in a truce is there's an end to this escalation of tariffs we were over. Yeah now how you can say. Well the economy's been doing well. Aren't we in the longest you know expansion and that is all true but we probably would have you know. Half a percentage percentage point of growth so three percents that a two point five percent if it wasn't for the drag that this is causing on on business investment in particular. Why did they decide to you? Like lock in certain purchases instead of just rolling back the tariffs. I mean. The answer is politics. The President's program here is done a lot of damage and I think politically weekly. It has Had A toll so the purchases are necessary. They're like a big gift right. Did you harm but here look. I've come back and I've got these great purchases for you you're going to be overflowing in orders Sore sorta this gigantic present that they can tie up with a bow. I think that's why rolling. Back the tariffs this is a president who has called himself. Tariff manny loves tariffs trump call themselves tariff man. Yes he's a man he likes tariffs. It's something. I think he understands and he feels is. It's it's a bit like a blunt instrument it's a bit of a back to the head but the question that we have to ask yourself his you know did it. Work was at the right way A lot of people are are underwhelmed by the deal and the you know the ministration noses which is why they're talking about face is to phase three phase four as ones like the big headline and then maybe the ABC little one little two little three will be the details. Yes I think. We heard the word historic used about one hundred times yesterday. I think history is not going to judge it particularly kindly though I mean. Is this this deal like a win for four the US is a win. For the trump administration. I think it depends on how you define win if you win is short term purchases. Then we're going to see some I don't think anyone who has observed the relationship over the past twenty years with think that that was really a legitimate legitimate goal given the cost of the US economy. Mary lovely thank you so much for talking with us. Oh you're welcome enjoyed it very much and I guess we'll we'll talk again for face to ABC. Let me know. This episode of the indicator was produced by Lena. Sense Gerry are. Intern is not a Louis. Our editor is Paddy Hirsch and the indicator is a production of NPR uh-huh.