Daily Memo: Unsettled Trade Settlements, China Overtakes Russia in the Pentagon’s Eyes

The U.S. and China are having trouble agreeing on what they agreed on in their phase one deal, and the Eastern Mediterranean situation just keeps heating up.

Trade deal uncertainty. Pen was finally put to paper in both the U.S.-China “phase one” trade deal and the new NAFTA last week, but implementation of both agreements is already proving tricky. As we forecast, the phase one deal leaves the biggest points of contention between the U.S. and China unsettled, ensuring that bilateral trade relations will remain rocky for the foreseeable future. The next stage of negotiations will be all the more complicated if the two sides can’t agree on what’s already been agreed on. Over the weekend, for example, it became clear that there’s still some disagreement on the additional relaxation of tariffs. Perhaps more problematic, it’s still unclear if Beijing can facilitate the promised surge in imports of U.S. goods and services – by $200 billion over the next two years, including a $16 billion increase in imported U.S. farm goods. Similarly, regarding the USMCA, Mexico claims it did not agree to a provision included in the implementing legislation submitted to the U.S. Congress on Friday – the appointment of up to five U.S. attaches in Mexico to monitor its adherence to labor rules. Mexico’s top trade negotiator is in Washington for urgent talks on the matter. […]

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