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What's in the US-China 100 Day Action Plan?

 
 

Last week, the U.S. and China released the first results from the 100-day plan announced during the April meeting between U.S. President Donald Trump and Chinese President Xi Jinping. The Trump administration had promoted the plan as the path to improve strained ties and boost cooperation. With just over a month into the plan, both sides have agreed to certain “initial commitments” in ten broad areas, covering agricultural trade, financial services, investment, and energy.

Despite challenges in bilateral relations, the two governments had set expectations for the plan high. At the time of the Mar-a-Lago Summit, the 100-day plan was heralded as “the most important outcome of the two presidents’ meeting.” Much of the press coverage of the plan, at the time, agreed it was the most important of the relatively few outcomes of the two presidents’ meeting.

The so-called “early harvest” of initial outcomes, however, was relatively unimpressive — even with Commerce Secretary Wilbur Ross claiming that, with these outcomes, the U.S. had taken “gigantic steps” in the trade relationship.

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100-Day Plan Outcomes: Where’s the Beef?

The potential impact of these steps to improve the economic and commercial relationship remains open for debate. The agreements with China may improve U.S. market access for beef, certain financial services companies, and electronic payments providers. China, for its part, won a pledge to resolve a long-standing barrier to its poultry exports to the United States and an upgrade to the U.S. delegation headed to the Belt and Road Forum, held in Beijing on May 14 and 15.

As part of a Trump tweet-endorsed deal, China agreed to allow U.S. beef in, no later than July 16, with conditions consistent with international food safety and animal health standards. At the same time, the United States will issue a proposal to allow Chinese cooked poultry to enter the U.S. market.

Ross has said China is at least a $2.5 billion beef market that is now opening to U.S. beef. This could amount to a substantial win, defenders of the deal have argued, giving a substantial boost to global U.S. beef exports that totaled $6 billion last year.

Critics, however, took aim at the beef announcement as just the latest in a series of Chinese promises, dating back to 2006, to reopen its market to U.S. beef after banning it in 2003 amid concerns over mad cow disease. Most recently, last fall, China agreed to allow imports from the United States but did not reach agreement with the United States on the specific regulatory requirements that would allow for the resumption of trade. Until the necessary regulations are finalized, questions will remain about whether this time the commitment will actually be implemented.

In recent years, trade officials had speculated that the Chinese government maintained the beef impasse in part as a bargaining chip to push the United States to lift its own regulatory hurdles on allowing imports of cooked poultry products from China. As part of the deal, Washington has committed to open its doors to Chinese chicken, which had been banned by the U.S. Congress due to sanitary and health concerns. As a result, the Trump administration will need to engage with key members of Congress — most notably Representative Rosa DeLauro — who have been active in blocking funding for the U.S. Department of Agriculture to grant regulatory approval,

Some have also claimed that the other agreements are far from solid victories, as well. The 100-day outcomes included commitments to allow more natural gas exports from the United States to China. The plan said the United States “treats China no less favorably” than any of its other partners in authorizing natural gas shipments from the U.S. to Chinese ports. This is largely a restatement of current U.S. regulations, under which the U.S. Department of Energy must grant licenses for exports of LNG. It is not yet clear, however, how rapidly Chinese demand and capacity to import natural gas will materialize.

Regarding electronic payment services (“EPS”), China initially agreed to open its payment processing market with its World Trade Organization accession in 2001.  That didn’t happen, however. In response to a case filed by the United States, in 2012, the WTO ruled that China still discriminated against foreign electronic payment providers.  The agreement in the 100-day plan merely reaffirms China’s intention to begin the long-delayed process of abiding by this WTO ruling by allowing foreign payment providers to “begin the licensing process,” albeit with no guaranteed outcome.

China’s commitment to allow wholly foreign-owned financial services firms to provide credit rating services also signifies progress.  Yet, for industry insiders, this was an expected, if positive outcome.

Other commitments appeared largely conciliatory and cordial, while lacking substance.  In a nod to President Xi Jinping’s signature foreign policy, the United States agreed to “recognize the importance” of China’s “One Belt and One Road” (OBOR) initiative and to send a higher-level delegation, led by National Security Council Senior Director Matt Pottinger, to the Belt and Road Forum in Beijing.

No Agreement on Larger Issues

Those hoping for “gigantic steps” may have been let down. Many were disappointed that the 100-day plan failed to address larger issues such as steel and aluminum overcapacity, burdensome technology restrictions, and unequal treatment of U.S. companies in a variety of sectors. Ultimately, it is difficult to see how these commitments, by themselves, will put any significant dent in the U.S. trade deficit, an almost singular focus of the Trump administration.

Prior to the announcement, some business leaders and industry associations pushed a more varied agenda. The U.S. Chamber of Commerce, for instance, called on the two governments to curb discriminatory regulations in China’s ICT sector. China’s Cybersecurity Law enters into effect on June 1, and many fear that it could bring substantial market access barriers.

Even beyond the usual reaction from business lobbies and other stakeholders, though, some observers continue to put great hope in the new American president and his “tough talk.” Candidate Donald Trump consistently promised that he would utilize his negotiating prowess to strike great deals with China and end its trade surplus. But, for all that bluster, Trump appears to have accomplished little to date in shifting the relationship, fixing the trade imbalances, and solving America’s trade deficit.

Of course, it is still early in the process. The Trump administration hopes to build on these agreements in further rounds of trade negotiations to be held in coming months.

And the two sides may not have to wait too long for next steps. Both sides acknowledged that the 100-day action plan outcomes fell under the larger Comprehensive Economic Dialogue (CED), now an ongoing high-level exchange that will replace aspects of the Obama administration’s Strategic and Economic Dialogue (S&ED). The first formal CED meeting is now slated to take place in the United States this summer, at a point likely close to the actual 100-day deadline.

Jesse Heatley is a Director at Albright Stonebridge Group and a National Security Fellow at the Truman National Security Project. Views expressed are his own.

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