Washington Insider -- Thursday

No New Trade Deal from Recent China Talks

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Rep. Conaway Confirms He Won’t Run in 2020

Labeling it the “worst kept secret in America today,” House Ag Committee Ranking Member Mike Conaway, R-Texas, confirmed that he will not seek reelection in 2020.

"It's been an honor and privilege to have served," Conaway said of the decision he has been mulling for a year. "... I'm going to put (wife) Suzanne and our children and grandchildren first."

Representing the Texas district since 2005, Conaway rose through the ranks and eventually took the gavel of the House Ag Committee, in charge of the panel for the 2018 Farm Bill.

"This was a big decision for me ... I'm (leaving) on my terms," he said.

Several Republicans have been jockeying the past few months to garner the top GOP spot on the Ag panel; chairman should Republicans regain control of the House in 2020 elections.

ERS Move Won’t Impact Trade Analysis: USTR Lighthizer

Questions from lawmakers submitted after hearings can cover a lot of ground, and one released this week by the Senate Finance Committee that were asked of U.S. Trade Representative Robert Lighthizer underscored that situation.

Lighthizer was asked about whether declining staff numbers at USDA’s Economic Research Service (ERS) due to the pending move of the agency to Kansas City would impact the ability of this Administration to investigate and enforce violations of WTO or FTA obligations.

“Over the years, USTR has worked with USDA to perform economic analysis for various agricultural trade issues and negotiations, including in support of enforcement actions related to obligations under WTO and FTA agreements,” Lighthizer said. “USTR expects to continue receiving this type of support from USDA regardless of the location of USDA employees. We do not believe the proposed relocation of ERS employees to Kansas City will have any effect on our ability to continue this interagency cooperation.”

Washington Insider: No New Trade Deal from Recent China Talks

The urban press is reporting this week that U.S. and Chinese negotiators have ended a new round of talks aimed at ending a tariff war over trade and technology with no word of any “breakthrough” level of progress.

For example, the Washington Post reported from Shanghai that this week’s two days of talks, the first since Presidents Donald Trump and Xi Jinping agreed to resume negotiations that collapsed in May, ended Wednesday afternoon about 40 minutes ahead of schedule. “Neither delegation spoke to reporters before U.S. Trade Representative Robert Lighthizer and Treasury Secretary Mnuchin left for the airport.”

The Post added that mostly the “same disagreements remain, with no indication either government is willing to offer major concessions.”

The Post also noted that ahead of the meeting, “President Donald Trump rattled financial markets by accusing Beijing of trying to stall in hopes he will fail to win re-election in 2020.”

The dispute over U.S. complaints that Beijing steals or pressures companies to hand over technology has battered exporters on both sides and disrupted trade in goods from soybeans to medical equipment. The U.S. administration has raised tariffs on $250 billion worth of Chinese imports while Beijing responded by taxing $110 billion of U.S. products.

Chinese leaders are resisting U.S. pressure to roll back plans for government-led development of industry leaders in robotics, artificial intelligence and other technologies. Washington complains those efforts depend on stealing or pressuring foreign companies to hand over technology.

For their part, American negotiators are reluctant to cede to Chinese demands that punitive U.S. tariffs be lifted immediately. “President Trump wants to keep some penalties in place to ensure Beijing carries out any agreement,” the Post said.

Rhetoric on both sides has hardened, prompting suggestions U.S. and Chinese leaders are settling in for a “war of attrition,” the Post said.

President Trump’s earlier comments included the observation that if reelected, he would get “much tougher” with Beijing. “China would love to wait and just hope,” he said, and suggested that they will “pray that Trump loses…and then they’ll make a deal with a stiff, somebody that doesn’t know what they’re doing.”

Asian stock markets tumbled in response. The Shanghai Composite Index shed 0.7%, Hong Kong’s market benchmark dropped 1.3% and Tokyo lost 0.9%.

Trump’s “aggressively tinged” remarks were a “stark reminder to investors that the U.S. and China are no closer to an agreement and, in fact, might be drifting farther apart,” said Stephen Innes of VM Markets in a report.

Also on Wednesday, Bloomberg presented a somewhat more optimistic report of the talks. It noted that U.S. and Chinese trade negotiators plan to meet again in early September and that the negotiators had discussed China’s import of agriculture products from the U.S. “based on its needs.” It cited China’s state-run news agency Xinhua’s report that the September gathering will “include high-level officials.”

The White House also reported that the talks had included “the Chinese side’s commitment to increase purchases of United States agricultural exports.”

Relations between the delegates appeared cordial, according to the pool report. Xinhua said it was a candid, efficient and constructive exchange on major economic and trade issues. China’s trade minister Zhong Shan played a more prominent role in the discussions than in previous rounds, although “his greater involvement had caused concerns among some U.S. delegates as he is perceived as a tougher negotiator.”

Expectations for a breakthrough in the talks have been low and Bloomberg suggested that “the two sides are further apart now than they were three months ago, when negotiations broke down and each side blamed the other for derailing attempts to reach a deal.”

So, there seems to be very little good news from the recent talks, except that they are expected to resume in a few days. Observers are paying close attention to the level of China’s food product imports, in hopes of some breakthrough there — but overall reasons for optimism in these important talks seem to continue to be scarce, Washington Insider believes.

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