January 2, 2019 / 6:54 PM / 14 days ago

Commentary: How to handle the U.S.-China trade talks

As U.S. and Chinese delegations prepare for upcoming trade talks in Beijing, the two countries’ disputes over tariffs and trade are rattling markets, businesses, governments, consumers and workers across the globe. All of this corrosive uncertainty was entirely predictable – and explains why Presidents Donald Trump and Xi Jinping failed to reach an agreement when they met at the G20 summit in Buenos Aires in November.

U.S. President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj

Elaborate negotiations take tenacity, expertise and planning. They also take time.

There are certainly real challenges in the U.S.-China relationship. And virtually all progress Washington makes with its Chinese counterparts has come from an intense series of talks. At one point in the negotiations to allow U.S. beef access into Chinese markets, for example, the battle was down to experts debating a final letter – whether or not to include the letter “s” at the end of the word cow to determine traceability requirements for American cattle.

But this approach works. From these agreements and countless other negotiations, clear lessons emerge. Here are some of them:

PLAN: Negotiations like these require intense preparation. They require input from experts on the region and the issues – and forethought on which of a wide array of options your side would like to resolve, knowing that most will be cast aside and the focus will ultimately center on a handful of true priorities. During a 2014 visit between Presidents Barack Obama and Xi, this planning resulted in agreements on everything from climate to trade to visa validity and more.

KNOW WHERE YOU’LL GO – AND WHERE YOU WON’T: Chinese negotiators come to these discussions immensely well-prepped, with clear knowledge of where they might give and where they won’t. Their American counterparts typically do as well. To not do so is to lose before you walk through the door.

By drawing firm lines on freedom of navigation in the South China Sea, freedom of the press and more, the United States has long made clear where defined boundaries exist. It’s when and where the give exists elsewhere that it gets more interesting.

FIND LEVERAGE: When Chinese economic espionage spiked in 2015, Washington threatened sanctions ahead of a U.S. summit with Xi. Rather than face those sanctions and the prospect of a challenging state visit, China sent a special envoy from the Communist Party’s central committee ahead of that visit as it scrambled to undo the damage done.

Like Trump’s tariffs or not, they have provided the U.S. president with leverage. Whether or not that leverage will yield enduring outcomes depends on what he does with it.

USE THAT LEVERAGE: Those cyber negotiations yielded a U.S.-China accord that not only still stands, but reduced cyber incursions dramatically in the years that followed. It was the fear of these sanctions and an underwhelming state visit plus intense negotiations that drove the U.S. success. Some of those same fears exist now.

DETAILS MATTER: This is where experts on the National Security Council and agencies like the State Department matter most. From human rights and civil society concerns on through market access and intellectual property, negotiators can exploit vagaries to deny or delay for months and even years if they don’t want to comply without specific terms and dates.

It took pushing up against too many non-specific promises by Chinese officials claiming “we’ll soon be dining on American beef” for that beef access to finally happen, and even longer to secure approval to sell U.S. biotech. A World Trade Organization decision and countless pushes finally got U.S. credit cards accepted into Chinese markets last year.

PUSH BOUNDARIES, BUT TAKE YES FOR AN ANSWER: When it’s clear, after extensive back and forth, that you can make progress and there’s no more yield, bank the win.

Negotiations to encourage China to join the Paris climate accords took months of envoys flying back and forth before Beijing finally set real emissions targets – and stuck to them. While it wasn’t everything the U.S. side sought, China’s agreement was a stunning development that led other countries to announce emissions reductions and join the agreement as well.

Trump’s approach counters a number of these lessons. He appears to engage in little substantive pre-negotiation planning beyond the stagecraft and has repeatedly squandered his “final say” leverage by trying to solve longstanding crises without the necessary preparation, details or experts on hand to help seal the deal.

That discordant approach is how the Trump administration ended up with a series of purported wins from China that are mainly rehashed promises. It’s why the president bargained for another shot at a Qualcomm-NXP merger that was dead for months and even the companies involved don’t want to revive. And it results in announcements made, clarified, backtracked and more.

The U.S.-China relationship faces real problems. But it takes knowing the issues and the potential outcomes, and the substantive engagement of policy experts, for U.S. negotiators to get real yield. Instead, Americans have been left with a myriad of unanswered questions on issues like auto tariffs and what will happen when the 90-day “truce deadline” expires in March.

Trump was encouraged by his call with Xi in recent days, tweeting that “big progress” is being made. Xi’s message was more tempered, saying both sides had been working hard to reach consensus and that he hoped they “will meet each other halfway.”

Imported frozen seafood, some from China, is shown housed in a large refrigerated warehouse at Pacific American Fish Company imports (PAFCO) in Vernon, California, U.S. September 25, 2018. REUTERS/Mike Blake

The financial world, the global markets and U.S. political allies – not to mention the American public – crave both progress and certainty. In Buenos Aires, Washington and Beijing set a 90-day window to resolve the tariff issue. But much like when the clock began ticking, without a plan going into these negotiations, there won’t be real outcomes emerging from them. The United States can – and should – do better.

About the Author

Scott Mulhauser is the founder of Aperture Strategies, the former chief of staff at the U.S. Embassy in Beijing and the Export-Import Bank of the U.S., and a former senior advisor to the U.S. Senate Finance Committee. @Mulhauser

The views expressed in this article are not those of Reuters News.

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