Trump Stirs Alarm That He May Be Giving China a New Trade Weapon
This article by Shawn Donnan and Jenny Leonard for Bloomberg may be of interest to subscribers. Here is a section:
Details of the U.S. commitments and how the enforcement mechanism will operate remain scant. But Mnuchin’s comments have caused plenty of raised eyebrows from legal scholars to the business community and Congress.
If the U.S. allows China reciprocal enforcement powers, it would make China “judge, jury and executioner as to whether we have honored our obligations,’’ said Daniel Price, who served as a senior economic adviser to President George W. Bush and is now at Rock Creek Global Advisors in Washington. “I don’t think the U.S. business community is sufficiently alert to the risk of constantly being exposed to unilateral enforcement action by China.”
Details of the U.S. commitments and how the enforcement mechanism will operate remain scant. But Mnuchin’s comments have caused plenty of raised eyebrows from legal scholars to the business community and Congress.
If the U.S. allows China reciprocal enforcement powers, it would make China “judge, jury and executioner as to whether we have honored our obligations,’’ said Daniel Price, who served as a senior economic adviser to President George W. Bush and is now at Rock Creek Global Advisors in Washington. “I don’t think the U.S. business community is sufficiently alert to the risk of constantly being exposed to unilateral enforcement action by China.”
The quid pro quo of testing and enforcement is a clear risk from the impeding trade deal between the USA and China. Perhaps most important of all is that if the deal goes ahead as suggested above it represents a clear admittance that China is on par with the USA geopolitically. That may have already been a fact but it is quite something else to codify it in a treaty governing trade.
The clear potential is the agreement on trade will represent a buy the rumour, sell the news catalyst which will rollover into another corrective phase for the market. Short-term overbought conditions are evident on the majority of stock markets and while some are breaking higher there is significance risk of consolidation.