By GORDON WATTS
The distance between Washington and Beijing is more than 11,000 kilometers or nearly 7,000 miles. But it could be light years when it comes to the deteriorating trade dispute between the United States and China. During the past 24 hours, the chasm has deepened after President Donald Trump appeared to take relations between the US and the European Union out of the deep freeze following crucial White House talks. As discussions were about to start with European Commission President Jean-Claude Juncker to resolve the EU trade spat, China’s President Xi Jinping was making his keynote speech at the BRICS Summit in Johannesburg with the leaders of Brazil, Russia, India and South Africa in attendance.
Calling for an end to “unilateralism and protectionism,” Xi hammered home his point but stressed that “a trade war should be rejected because there will be no winners.”
Hours later, Trump was bragging about the outcome of his meeting with Juncker and the proposed plan to move towards “zero” tariffs after the EU agreed to buy more American exports worth billions of dollars, including soybeans and natural gas, as well as working to reform international trade rules.
Obviously the European Union, as represented by @JunckerEU and the United States, as represented by yours truly, love each other! pic.twitter.com/42ImacgCN0
— Donald J. Trump (@realDonaldTrump) July 25, 2018
“So, we had a big day, very big,” he told the media in the White House rose garden, standing alongside Juncker. “We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods.”
Juncker was slightly more restrained and pragmatic.
He made it clear that the EU was willing to import “soybeans from the US” but warned that negotiations would only continue if further tariffs were put on hold and “existing” ones were reassessed.
“The avoidance of a disaster is not a success,” Bart Oosterveld, the director of the global business and economics program at the Atlantic Council, a think tank in Washington, told The Guardian in London.
“What I think we saw is the resumption of some basic dialogue. Individual items like soybeans and LNG [liquefied natural gas] are not massively significant. I don’t think the EU would agree to a major revision of trade terms without steel and aluminum being taken off the table first,” he added.
Still, the news will be a wake-up call for Xi’s government, which was desperate to persuade the EU to become an ally in the US-Sino conflict.
In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice-Premier Liu He and the country’s top diplomat, State Councillor Wang Yi, had proposed an alliance between the two economic powers earlier this month by offering to further open up the domestic market to European companies.
“China wants the European Union to stand with Beijing against Washington, to take sides,” one European diplomat told Reuters. “We won’t do it and we have told them that.”
For Xi, that leaves the world’s second-largest economy standing alone as the trade war continues to escalate.
Great to be back on track with the European Union. This was a big day for free and fair trade!
— Donald J. Trump (@realDonaldTrump) July 26, 2018
At the BRICS Summit, rising tensions have dominated the gathering, which represents at least 40% of the global population, with China’s president spelling out the challenges ahead.
“Unilateralism and protectionism are mounting, dealing a severe blow to multilateralism and the multilateral trading regime,” he said, without mentioning the US by name.
“We are facing a choice between cooperation and confrontation, between opening up and closed-door policy and between mutual benefit and a beggar-thy-neighbor approach. The international community has again reached a new crossroads.”
Earlier, Trump had added another layer to the dispute when he went into Twitter overdrive, accusing the country of “vicious” trade tactics by targeting US farmers who “I love [and] respect” in tit-for-tat tariffs.
Until the rhetoric cools, the chasm between two of the world’s largest economic powers will turn into a black hole.
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