US Trade Representative Robert Lighthizer reassures Chinese Vice Premier Liu He as Donald Trump looks on, White House, February 22, 2019 (AFP)
It was not a good sign for crucial talks with China about Donald Trump’s trade war.
Speaking in front of the Chinese delegation and his high-level negotiating team on Friday, Trump — reportedly a high-profile New York businessman before becoming President — displayed his ignorance about Memoranda of Understanding, the foundation for an agreement.
I don’t like MOUs because they don’t mean anything. To me they don’t mean anything. I think you’re better off just going into a document. I was never a fan of an MOU.
US Trade Representative Robert Lighthizer — accompanied by Treasury Secretary Steven Mnuchin, White House economic advisor Larry Kudlow, and Commerce Secretary Wilbur Ross — embarked on a lengthy explanation to reassure the Chinese and reporters covering Trump’s appearance.
A MoU is a contract….It’s an actual contract between the two parties. A Memorandum of Understanding is a binding agreement.
But rather than moving on, Trump insisted on his erroneous belief, despite the risk of damage to the talks, “By the way, I disagree. A Memorandum of Understanding is not a contract, to the extent that we want….To me, the final contract is really the thing — and I think you mean that, too, Bob — that means something.
He rambled incoherently for several more seconds before Lighthizer said, “From now on, we’re not going to use the term ‘Memorandum of Understanding’. We’re going to use ‘Trade Agreement’.”
Chinese Vice Premier Liu He, sitting next to Lighthizer, said, “OK.”
Trump was appeased: “Good. I like that much better.”
Trying to Halt A Trade War
Trump has imposed tariffs on $250 billion of Chinese goods — about half of Beijing’s exports to the US — including a 10% duty on $200 billion, announced in September. China has retaliated with charges on most American imports.
Trump had set a deadline of March 1 for an agreement, threatening to raise the 10% tariff to 25%.
Last week Chinese and US negotiators reportedly drew up six MOUs on structural issues: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture, and non-tariff barriers to trade.
Trump declared on Twitter on Monday that he was postponing the tariff rise, proclaiming that a deal is near.
China Trade Deal (and more) in advanced stages. Relationship between our two Countries is very strong. I have therefore agreed to delay U.S. tariff hikes. Let’s see what happens?
— Donald J. Trump (@realDonaldTrump) February 25, 2019
He did not clarify if he now understands the definition of a Memorandum of Undertanding or a trade agreement.
I would not agree with you. There are indeed several types of intergovernmental agreements and MoU is one of the weakest in terms of binding. Trump may ignore this but challenging the very nature of the discussion places his negotiation partner in a position of weakness. Whatever the reasons, ignorance or strategy, only the result will count for the US citizens…