Statements made by US trade representative Robert Lighthizer caused ripples in the financial markets as he stated that a deal with China is not yet close to being finalized, with “much work to be done” before progress can be made if any is made at all.
Key Takeaways
- Lighthizer stated that China purchasing US goods wasn’t enough to close a trade deal.
- The US trade rep said that it was important to ensure that market outcomes and not state capitalism or theft were the determining factors of trade competition.
- Lighthizer emphasized repeatedly that a deal may not be possible.
Ambassador Robert Lighthizer testified on Wednesday in front of the House Ways and Means committee to state that the US could compete with China on trade, but only if clear rules were established between both nations.
“We can compete with anyone in the world, but we must have rule, enforced rules, that make sure market outcomes and not state capitalism and technology theft determine winners.”
Trade Deal Not Set in Stone
“Let me be clear,” Lighthizer said. “Much still needs to be done both before an agreement is reached and, more importantly, after it is reached, if one is reached.”
His use of conditional language was not a slip of the tongue – he went on to firmly state that there is a strong possibility of a no-deal outcome with China on the current trade negotiations.
“If we can complete this effort — and again, I say’ if’ — and can reach a satisfactory solution to the all-important and outstanding issue of enforceability, as well as some other concerns, we might be able to have agreement that does turn the corner in our economic relationship,” Lighthizer said.
Progress With China
The testimony comes after US President Donald Trump pushed back a key deadline in the delicate negotiations, citing “significant progress” as the reason for allowing more time for the process to unfold. The deadline in early March was initially established as a marker by which further tariffs could and likely would be imposed by both sides if a deal was not reached by that time. For now, existing tariffs are in place but the US and China have agreed to a “ceasefire” on new tariffs.
China has also agreed to buy $1.2 billion in US goods.
However, trade rep Lighthizer states that buying US goods is not enough. A major point of contention in the conflict is the alleged Chinese theft of US intellectual property on a vast, national, state—authorized scale, with China reportedly copying and stealing huge amounts of patents on US products and technologies in an effort to compete with and undercut the US in global trade.
Lighthizer states that the US needs assurances from China regarding the halt of intellectual property theft, and that action taken needs to be “specific, measurable; it has to be enforceable at all levels of government.”
However, the trade rep did not sound particularly optimistic, saying “I'm not foolish enough to think that there's going to be one negotiation that's going to change all of the practices of China or our relationship with them.”
"I don’t think it should just be a purchasing agreement." - Amb. Bob Lighthizer admits US-China agreement needs to be about more than just buying more Ag products, etc.#trade #China pic.twitter.com/BYzOcjaxl2
— Heather Long (@byHeatherLong) February 27, 2019
Market Reaction
Gold has ticked downward in today’s session, sinking further after the statements made by trade rep Robert Lighthizer. It’s unclear if his testimony had a significant impact on the price of spot gold, although it is being cited as the cause of general stock market volatility according to many analysts.
Spot gold hit a line of resistance just shy of $1,330/oz and has sunk over $10 since, testing the $1,320/oz mark at a session low of $1,319.86/oz and now hovering slightly above at $1,320.70/oz, down -0.33% on the day.