Home Insights US-China Negotiations: A New Yalta (two excerpts from the February GEAB bulletin)

US-China Negotiations: A New Yalta (two excerpts from the February GEAB bulletin)

On February 15 we drew a parallel between the US-Chinese “trade” negotiations and the historic treaties on world-sharing, such as Tordesillas or Yalta, ideas which now seem to interest some other analysts (The Conversation, February 27, 2019). Here is what we mentioned on this topic in our last GEAB bulletin:

‘Of course, there is also the US-China negotiations, which are certainly not just about trade, but also about the principles of co-governance and sharing the world. History may place these negotiations in the same category of major treaties as that of Tordesillas, sharing the world between the Spaniards and the Portuguese in 1494, or that of Yalta, organising the world around the Americans and Russians in 1945. Of course, we know that these great moments in history can easily fail to lay the right foundations…’

‘The markets were doused with cold water on 7 February at Trump’s announcement that there was no chance that he and the Chinese president would meet before the fateful deadline of 1 March for the trade agreement. The negotiations don’t seem to be going well. On the one hand, we know the bluffing techniques dear to the US president in his world poker games and this kind of statement doesn’t rule out a last-minute positive outcome. On the other hand, are China and the United States really interested in coming to an agreement right now? Aren’t they gaining some benefit, at least temporarily, from this kind of commercial cold war? If this second scenario prevails, new tariffs will be imposed on Chinese products from 2 March, followed immediately by identical measures on the other side. That said, these trade restrictions could be more ‘negotiated’ than they appear, effectively serving the interests of both parties. We anticipate mediocre announcements in early March: less bad than feared by the markets, but not good either. Let’s not forget that the two superpowers are primarily negotiating the limits of their respective areas of influence in a kind of new Yalta. ’

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