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Dancing to the trade talk tunes

One hesitates about becoming distracted away from the China-USA trade turkey trot, given its uncomfortable impact on Canada.
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One hesitates about becoming distracted away from the China-U.S.A. trade turkey trot, given its uncomfortable impact on Canada. And in case you are wondering what trotting turkeys have to do with this trade dispute, may I remind you of the nature of this dance. The basic step consists of four hopping steps sideways with the feet well apart, first on one leg, then the other with a characteristic rise on the ball of the foot, followed by a drop upon the heel – combined with scissor-like flicks of the feet and fast trotting actions with abrupt stops.

Further, should you think referring to turkeys in these trade talks is chickenfeed, the U.S. exports 3.5 million metric tons of poultry annually – even with a drop of 13 per cent of its exports triggered in 2015 when China banned all poultry imports from the U.S.A. following a multistate outbreak of avian influenza. Russia has been closed for all U.S. poultry since 2014 in retaliation for Russia's annexation of Crimea. And now, a Trumpian twist and shout acceptance of imports from China of cooked chicken is on a one-footed suspension with broken down trade talks.

President Trump has also gobbled volubly about the relative strength of the U.S.A. economy vis-a-vis China and reckons on winning a tariff-driven game of chicken (terminology often used in American academia discussions on political science and economics). In this instance, ‘chicken’ has its origins in a contest of wills in which two cars drive towards each other on a collision course. If one driver swerves and the other does not, the one who swerved is called a ‘chicken’. If neither changes course, both die.

But what happens if the swerve isn’t just avoidance of disaster but rather taking a fork in the economic road to survival. In this instance, China is fast-tracking a Silk Road – by land and sea – to the Mediterranean and Europe. Today, the European Union (EU) is China’s largest trading partner and China is the EU’s second largest after the U.S.A. Bilateral trade in goods predominate (annually $575 billion U.S.). The EU sells mainly petroleum, iron, integrated circuits, machinery and cars while importing computers, broadcasting equipment, telephones and office equipment and parts. The potential growth area is in services, presently valued at $70 billion U.S. annually – mainly in finance, insurance, logistics and communications – think of Huawei. China has also bought a lot of political goodwill following the U.S.A.-triggered European debt crisis when China purchased billions of Eurozone junk bonds from Italy, Greece, Ireland, Spain and Portugal. Disputes over textile exports from China (the Bra wars) have been settled. Antidumping measures to prevent China from dumping steel products are in place without great dispute. At the same time, a 1989 arms embargo in sending military equipment to China in response to the Tiananmen Square murders could well change. The Huawei communications battle has just begun.

At present, the EU remains fairly firm in its commitment to preferentially positive U.S.A. trade arrangements. But President Trump may well have to change his dance moves if and when Britain implodes as it retreats behind the English Channel.

Shuffle-stepping a trade deal with Mexico and Canada is a good start.

Alan Murdock is a local pediatrician.





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