Third Truce

By Isaac Cohen*

Negotiators from China and the United States, in Washington last week, announced the equivalent of a “third truce” in their ongoing trade confrontation. The first one was agreed at the 2018 G20 Summit in Buenos Aires and the second was at the 2019 G20 Summit in Osaka. Next meet will be at the mid- November Asia Pacific Summit, in Santiago, Chile.
The third truce has achieved some partial results, which at least indicate that, for the time being, both parties have agreed not to escalate the confrontation. It should also indicate a recognition by both parties of the damage which the confrontation has inflicted on the world economy and upon themselves.

The Washington agreement, judged modest by an editorial in The Wall Street Journal 10/14/19, consists in a commitment by China to purchase an additional $50 billion in US agricultural products and promises of better intellectual property protection and of opening to financial services companies. In exchange, the United States will not increase next week tariffs on $250 billion in imports from China, while both parties agreed to continue negotiations.

The least that can be expected is that this “third truce” was motivated by a recognition of the damage caused to the world economy by the trade confrontation. Both flagship publications of the Bretton Woods institutions, released in Washington, underline this point. The International Monetary Fund World Economic Outlook 2020 indicates “the negative impact of the US-China trade tensions…cumulatively reduce the level of global GDP by 0.8 percent.” https://presscenter.imf.org/Protected/Journalist/ViewHtml/3639
While the World Bank’s World Development Report 2020 is concerned that “conflicts among large countries could lead to a retrenchment or a segmentation of Global Value Chains,” which “account for almost half of all trade.” https://doi.org/10.1596/978-1-4648-1457-0

*International analyst and consultant, former Director ECLAC Washington Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

About Ramón Jiménez

Ramón Jiménez, Managing Editor de MetroLatinoUSA.Com (MLN). Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia (UDC). Email: [email protected]

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