Surprise! The signing of Donald Trump’s vaunted “Phase One” trade deal with China may be delayed until December amid wrangling over the best venue for a photo op with Xi.
After Chile canceled APEC last week, the White House was quick to insist that the timeline around getting the interim agreement done hadn’t changed.
“As of now, it appears APEC will not occur in Chile, and it’s our understanding the organization does not currently have a secondary site prepared. We’re awaiting potential information regarding another location”, the White House said in statement. “We look forward to finalizing Phase One of the historic trade deal with China within the same time frame, and when we have an announcement, we’ll let you know”.
Subsequently, US officials tossed out a variety of options for where Trump and Xi might meet.
Trump insisted that somewhere in the US would be ideal, and locales like Alaska, Hawaii and, of course, Iowa, were bandied about.
Now, it looks as though the deal – assuming it’s signed at all – will be inked in Europe. Sweden and Switzerland are possible locations, Reuters said Wednesday, citing a Trump administration official.
Last time we checked, neither of those two countries are in Iowa which, as it turns out, is no longer a likely venue.
In addition to the debate around the “best” location for the face-to-face meeting, the terms of the deal aren’t yet finalized. Indeed, it’s still possible the deal won’t even come to fruition.
The official, who asked not to be named, told Reuters that although a deal is more likely than not, there are no guarantees. Far from it.
As you might imagine, China is said to be using the impeachment probe as leverage. “The official said China was believed to see a quick deal as its best chance for favourable terms, given pressure Trump is facing from a congressional impeachment inquiry as he seeks re-election in 2020”, Reuters says.
Over the past several days, it’s become increasingly clear that the Chinese will demand meaningful tariff relief in exchange for Xi’s signature. The Trump administration is said to be debating the removal of duties put in place on September 1 and market participants have widely speculated that the scheduled escalation on December 15 will have to be shelved in order to convince Beijing to acquiesce to the interim agreement.
Meanwhile, Chinese officials are said to be skeptical of the prospects for a longer-term deal that addresses the structural issues at the heart of the dispute. A sweeping agreement like that which Trump has variously promised to deliver is generally seen as far-fetched, it not totally unrealistic.