NOEL KING, HOST:
Trade negotiators from the U.S. and China have reportedly reached an initial deal that might end the 18-month trade war. President Trump tweeted yesterday that a, quote, "big deal" with China was very close. Here in studio is Scott Kennedy. He's the trustee chair in Chinese business and economics at the Center for Strategic and International Studies. Thanks for coming in.
SCOTT KENNEDY: Good morning.
KING: OK. So do we know whether this deal is happening for sure?
KENNEDY: We don't. It's very likely that it is. But we've had four other premature announcements. And so we don't want to say for sure until the Chinese confirm it. And on Friday, they did not.
KING: All right. We're not going to do that on MORNING EDITION. Do we know what's in this initial deal, this proposed deal?
KENNEDY: Not 100% because no one's seen a text yet, but most likely it includes some Chinese concessions to buy American products, some concessions regarding intellectual property rights and other things and then a step down in tariffs from both sides.
KING: OK. Is it possible based on sort of looking at what the U.S. gets out of this and what China gets out of this to say which country comes out the winner?
KENNEDY: Well, I'd say in the short term, the Chinese come out ahead. The U.S. really doesn't get what it was originally looking for, which was trying to constrain Chinese industrial policy. Instead, it sells some products to the Chinese, which probably would have been sold anyway. From China's perspective, they get the U.S. off the back for a while, at least through the rest of the first Trump administration.
KING: OK. At the root of this trade war, as you point out, is a fight about intellectual property. The United States says China takes it from U.S. companies that want to do business in China, and that is simply unfair. President Trump talks about this all the time. Does this deal sort that out?
KENNEDY: A little bit. The Chinese have changed some of their laws to step up protection of intellectual property rights to punish those who steal it, liberalized their economy to make it a little bit harder to coerce American companies. But overall, it's going to take a while to see if those promises really translate into actual activity. In the meantime, Chinese subsidies and other things that promote Chinese industry at the expense of others won't stop whatsoever.
KING: OK. We have spent the past 18 months talking to farmers, among others, on this show. These are people from the Midwest primarily who are really worried about the trade war. They say it has hit them hard. How will they do under the terms of this deal?
KENNEDY: If it's implemented as promised - and we still need to see the details - it should mean a significant increase of agricultural exports to China. In 2017, exports were around 17 billion per year from the U.S. The deal potentially includes promises that the Chinese will buy 40 to 50 billion per year. If they can do that, that'd be a significant increase. But again, we're going to have to see it implemented to know for sure.
KING: OK. We were expecting new tariffs on Chinese imports starting this Sunday that would likely have made some consumer goods more expensive during the holiday shopping season. Where does that stand now?
KENNEDY: If the deal is implemented, according to reports, those new tariffs should not be implemented, and existing tariffs should be cut by half. And so Christmas shoppers and others should breathe a sigh of relief, as well as the stores that sell those goods.
KING: OK. That is good news for people this shopping season. Let me ask you, lastly, what still needs to be worked out, if anything?
KENNEDY: Well, for this deal, they still have to scrub it on the legal side. The Chinese leadership still has to agree to it. And then they'll have to announce it. More long term, this is, just remember, just supposed to be phase one. So this really still doesn't get to the - many of the core issues that the U.S. and others have. At the same time, we've had a wrecking ball to the WTO and international system, and that's going to need to be repaired as well.
KING: Scott Kennedy with the Center for Strategic and International Studies, thanks.
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