Listen: John Carney Says The Phase One Trade Deal Is A Test for China

The phase one trade deal signed in the White House this week is a historic break-through for the Trump administration, establishing enforceable commitments by China for the first time.

It should be looked at as a test for China, John Carney told Breitbart News editor-in-chief Alex Marlow on Breitbart News Daily Thursday. If China lives up to its commitments under the deal, including protecting American intellectual property and ending forced technology transfers, it will demonstrate that President Donald Trump’s policies have forced China to abandon at least some of its predatory mercantilist strategies.

If China fails, the U.S. can unilaterally impose tariffs and China is prohibited from retaliating with its own tariffs, Carney explained. If China continues to resist reforms that would make it a safe trading partner, the U.S. will have to move away from trade with China.

Another important achievement is that the U.S. got to keep nearly all of its existing tariffs in place, Carney explained.

The deal also should open China’s markets to U.S. beef, dairy, and poultry, long a source of frustration for U.S. farmers excluded by non-tariff barriers.

The deal also requires China to change the way claims of intellectual property theft are handled in China, a significant legal reform that should discourage Chinese companies from stealing I.P. and trade secrets.

China’s willingness and ability to abide by its commitments is still the big unknown, Carney said. But the trade deal sets up a “trust but verify” regime. If China fails the test, the U.S. would be justified in decoupling its economy from China’s, Carney said.

“China has agreed to stop a bunch of abusive practices and agreed that we can respond to tariffs, and they will not retaliate. That’s something that has never been done before,” Carney said. “If China will not live up to this agreement, then there will be no phase two.”

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