CWA # 140

G-20 Summit

For the US, it was trade, tariff and talks

Sourina Bej 6 July 2019

Photo Source: Time

The United States and China agreed on 29 June to restart trade talks and that Washington would hold off on imposing new tariffs on Chinese exports. The move is a pause in the trade hostilities between the world's two largest economies. However, a pause is not a détente or a rapprochement.

As an international forum, the Group of 20 countries (G20) is watched more closely for its meets on the sidelines than on the post-summit outcomes. Thus even when stark differences were visible among the member countries on climate change, digital innovation and e-commerce and marine plastics, the trade escalation between the US and China dominated the course of the summit. 

The time at which the G20 meeting took place the countries (19 nations and the European Union) each had pressing issues with other members on bilateral and multilateral levels. Thus the series of sittings between US President Trump and Saudi Crown Prince, Russian President Putin, Turkey President Erdogan, Japan and Indian Prime Ministers Shinzo Abe and Narendra Modi; Putin and French President Emmanuel Macron; France and Turkey; Japan and China; Chinese President Xi Jinping and South Korean President Moon Jae-in: all assume significance. These sideline meetings had come at a time when each of the member countries had at one point had severed and bitter relation with the other. 

For example, US relation with Saudi Arabia was strained after the killings of the NYT columnist Khashoggi; Turkish President Erdogan after losing the domestic elections in capital is now looking to buy Russian S400 which is yet another rule breaker for a NATO country; France's relation with Russia and China has taken a new look after the EU-BRI meeting; and India's relationship with the US worsened in the backdrop of imposition of trade tariffs by each country.  

Of these series of meetings, the most anticipated was that of President Donald Trump's meetings with his Chinese counterpart Xi Jinping, given the escalation in trade tensions that have embraced many countries and tech giants to its conflict fold. The meetings ended on a cordial note but with no breakthrough or "big deals" as was hoped. The two countries have called on to halt the raising tariffs until the details are resolved. From the side meetings to the core issues discussed at the G20 by the US, few questions arise on the pattern of Trump's foreign policy and the debates that could follow. What do the G20 meetings tell about Trump's conflict and protectionist foreign policy? What does this thaw in the 'Tariff War' speak about further trade relations with China?      

Trump's Foreign Policy: Swinging from Escalation to De-escalation  

Before President Donald Trump even landed in Osaka, Japan, for the G20 summit, his tweets were aimed at his America's allies, especially Japan, India and Germany. While he dejected the nature of the US defence treaty with Japan, he in the same tone spoke of his displeasure in India's decision to impose retaliatory tariffs of US exports and accused Germany of shirking its defence commitments before talks with German Chancellor Angela Merkel. This is typically in line with his personalised change that he has brought about while dealing with the foreign leaders. However, what was interesting to note is that while he was seeing taking a critical stand against US allies, he was also noted for his meeting with Xi Jinping and halting the tariffs.

Moreover, consistent with his nature, in a single tour after G20, he became the first sitting President to visit North Korea DMZ and shook hands with the leader Kim Jong-un. An idea that many believed he toiled with even before setting foot in Osaka. Thus one could see that he is now being hailed as a conflict broker by giving an image boost to the lost Hanoi cause when time needs him to be. 

A Trade Détente? 

The United States and China agreed on 29 June to restart trade talks and that Washington would hold off on imposing new tariffs on Chinese exports. The move is a pause in the trade hostilities between the world's two largest economies. However, a pause is not a détente or a rapprochement. The truce has rightly brought in relief from a nearly a year-long dispute in which both the countries have imposed tariffs on each other's imports, disrupted the global supply lines and dragged the currency and value through the roof. However, this doesn't necessarily mean a lifting of the existing import tariffs or returning backs to talks. The present decision is similar to what the two leaders had agreed before when they last met at the G20 in Buenos Aires in 2018. The talks will only resume if China returns to the original text on fair playing ground, discusses issues about fair technology transfer, corporate and espionage. Also, the question of Huawei remains unresolved. Even though the issue might follow later, it is one of the sensitive chords that China wouldn't be easy to let go. 

Taking a look at the trade conflict, Trump has often been vilified as a pernicious protectionist because of his policies such as abandoning the Trans-Pacific Partnership and saying that he is ready to walk away from the  North American Free Trade Agreement. It is feared that his policies are hurting the US economy by restricting the entry of foreign goods and also to the international market. However, his policies are not radically different from past administrations.  The US has always had protectionist trade policies. Even the pro-free trade Republican administrations of Presidents Ronald Reagan and George W. Bush promoted significant barriers to trade. For example, Reagan pushed Japan to unilaterally limit the number of automobiles it exported to the US, while Bush erected tariffs against foreign steel. However, what Trump has done is that he went against a country too far and too soon. 

Secondly, the trade talks if it resumes will bring in debates on technology. Who holds the technology holds power is the rhetoric that will dominate the negotiations. China is determined to upgrade its industrial base in 10 strategic sectors by 2025, including aerospace, robotics, semiconductors, artificial intelligence and new-energy vehicles. China is viewing the tariffs on technology transfer as the US effort to thwart its rise as a geo-economic power. 

Sourina Bej is a Research Associate at the ISSSP, NIAS.