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What to Expect from the 2018 G20 Summit at Buenos Aires

What to Expect from the 2018 G20 Summit at Buenos Aires

The long-anticipated trade talks between China and the United States just had a last-minute change in scenery as of recently with the location being set at Buenos Aires at the upcoming G20 conference rather than Washington. This marks an unprecedented break from conventional trade talks as this is the first time the two largest economies engaged in bilateral trade talks in a third-party country. Furthermore, many observers of the trade war are nervous of what may happen next as the staff-lead trade talks between China and the US came to no fruition. Both Donald Trump and Xi Jin Ping are going into the discussion with no draft documents on any proposed deals to resolve the trade disputes before the 25% US tariffs come into action on January 1st. The discussion of US-China trade issues at the G20 conference is also taking place in context of a separate dinner between Trump and Xi following the conference. At this event, both leaders can bring up to six aides with them to discuss any terms or issues the two countries may have with one another.

Tit for Tat Conflict: The Trade War Behind the Negotiations

For almost a year, the United States and China have engaged in tit for tat trade conflicts with progressively escalated tariffs being levied on both sides on a variety of goods ranging from aircraft parts to agricultural goods. Although neither superpower has caved in due to economic pressure, the uncertainty and rising prices have depressed economic growth in both countries somewhat. Despite the limited economic damage caused from the tariffs, both sides have little incentive to backdown due to domestic political concerns. For Xi Jin Ping, the tariffs launched by the US is just a continuation of an ongoing strategy of “containment” from the US government against China and caving in to any demands from the US without extracting concessions would mean humiliating China on the world stage. For Donald Trump, the accusations against China for unfair trade practices was a major part of his rhetorical strategy in the 2016 campaign trail and to backdown against China would mean jeopardizing the increasingly tenuous hold of the Republican party and his presidency in 2020.

This sense of stalemate can be seen twofold. One, the lack of draft documents for Xi and Trump to discuss about leading up to the G20 conference. Two, the fact that the US will not budge to the up to 192 concessions China has offered thus far to loosen the conflict.

How Will This Affect G20 and Global Trade?

Officials from other G20 countries are anxious to see the trade war end promptly between China and the US at this talk but expectations remain low for any substantive breakthrough. Within the Chinese and US Government, there is also pessimism on how many concessions either Trump or Xi are willing to give on the trade dispute. The sudden move for US-China trade talks from Washington to Buenos Aires also indicates that the trade war will become an increasingly domineering issue at the conference on November 30th. The other topic that will be brought up at the G20 summit is the reform of the WTO, an organization that President Trump is skeptical of and the EU has suggested certain reforms to better address the needs of the modern economy.

Overall, the expectations of any breakthrough is low due to domestic political concerns, a lack of sufficient preparation, and uncertainty on both sides if any concessions were given on trade.

Sources:

https://www.reuters.com/article/us-g20-argentina-usa-china/u-s-treasury-official-says-no-decisions-on-formal-china-talks-idUSKBN1GU0P8?wpisrc=nl_finance202&wpmm=1

https://www.scmp.com/economy/china-economy/article/2173775/china-and-us-teams-bypass-washington-and-go-straight-buenos

https://www.scmp.com/economy/china-economy/article/2174232/all-eyes-buenos-aires-beijing-and-washington-hammer-out

https://www.washingtonpost.com/business/economy/trump-and-xi-to-meet-in-bid-to-end-trade-war-tensions/2018/10/11/5f73e926-cd6a-11e8-920f-dd52e1ae4570_story.html?noredirect=on&utm_term=.e3baeae23a9c

https://www.scmp.com/economy/china-economy/article/2174333/white-house-trade-adviser-peter-navarro-excluded-xi-jinping

https://www.cnn.com/2018/11/19/politics/us-china-washington-trade-talks/index.html

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