The Art of the Phony Deal

Judging by polls and interviews, a large minority of Americans have been gullible enough to believe President Trump when he has boasted of big breakthroughs in resolving the trade war with China, the hot war with the Taliban, the twilight war between Israel and the Palestinians, the risk of nuclear war with North Korea, and the disadvantageous trade relations with Mexico and Canada. In reality, the “deals” he has touted are either non-existent (North Korea), one-sided and fanciful (Israel), wishful thinking (the Taliban), or marginal adjustments (China, Mexico, and Canada).

                Let’s take them one by one, beginning with the latest.

                The War in Afghanistan. To his credit, Trump has consistently sought to withdraw US troops from the endless war, a politically popular position. And he has tried to do it with dignity. His negotiator, Zalmay Khalilzad, is a savvy American diplomat of Afghan origin who displayed painstaking persistence in gradually bringing the Taliban along. The heart of the bilateral deal is a U.S. troop withdrawal over 14 months in exchange for a prohibition on the Taliban giving sanctuary to jihadists, as it did to al-Qaeda before 9/11.

But the administration also failed to include the Afghan government in the talks. That would have complicated negotiations, probably pushing them past the American elections. The resulting agreement was fragile and began to shred days after being signed. The Afghan government refused to abide by the provision to release five thousand Taliban prisoners. The Taliban responded by refusing to begin peace talks before the release. The Taliban then attacked an Afghan army checkpoint, and the U.S responded with an air strike on Taliban forces. Far from bringing a settlement to the country, the agreement looks like a fig leaf to cover a U.S. withdrawal for Trump’s political benefit.

Israel and the Palestinians. Here, too, a key player in the conflict was excluded from discussion or consideration, which seems to be a pattern in Trump’s methodology.
By moving the U.S. embassy to the disputed city of Jerusalem, endorsing Israel’s annexation of the Golan Heights, and declaring Israel’s Jewish settlements in the West Bank legal, Trump guaranteed Palestinian leaders’ hostility and distrust. They abandoned their regard for the U.S. as a mediator and refused to deal with Jared Kushner, Trump’s son-in-law, who was put in charge of formulating what Trump called “the deal of the century.”

But the lengthy document is not a deal. It is just a dictation of desires. It is not the product of any negotiation—except perhaps behind the scenes between the Trump administration and the Israeli government of Binyamin Netanyahu. Its calls for Israeli annexation of Jewish settlements and the Jordan Valley, and for a Palestinian state on scattered fragments of land, infuriates the ardent Palestinian nationalists who want a coherent swath of territory. That also draws objections from the extreme Israeli right, which opposes Palestinian statehood, wants to annex all of the West Bank, and rejects the concept of Jewish settlements in disconnected enclaves.

The plan focuses on Israel’s legitimate security concerns and would create a demilitarized Palestinian state whose airspace would be controlled by Israel. But it contains scarcely a word about the Palestinians’ security, which is frequently bulldozed by the Israeli army and teams of vigilante settlers.

In the Palestinians’ interest, the plan contains a long, detailed list of grants, loans, and other funding for extensive economic, educational, and infrastructure development. All that would benefit Palestinians economically, and an argument can be made for the Palestinian leadership to negotiate with an eye toward those benefits. But Trump can’t make that happen. If you stick your finger in someone’s eye, it’s hard for him to see you clearly as a friend.

Trade With China. Trump has a knack for creating a problem and then solving it—or pretending to. When he imposed tariffs on China, and China retaliated, Trump dumped compensation on U.S. farmers who were hurt, lied at rallies that Americans were not the ones paying the import duties, and finally signed what he called a “big, beautiful monster” of a deal as the first phase of what is supposedly going to be a larger trade agreement. An Indiana farmer was quoted in The New York Times as saying, “Instead of giving all the money to China, now we’re going to get some of it back. He had the guts to stand up to these other countries.”

Well, not quite. The trade war hurt American manufacturing, which lost 12,000 factory jobs in December alone, continuing a decline in Ohio and other industrial states. From Midwestern soybean farmers to Maine lobstermen, the damage to a Chinese market that had been carefully built up over many years will not vanish instantly.

Business hates uncertainty, which is exactly what Trump’s bludgeoning approach injected into what had been dependable Chinese purchases from the U.S. Nothing in his deal restores long-term dependability. Trade specialists deride as unrealistic Trump’s claim that the agreement will lead China to raise its U.S. farm purchases to $50 billion annually, and to an overall total of $200-billion to include oil, gas, drugs, planes, and services. That pledge lasts only two years, and the agreement’s wording is vague enough that Chinese Vice Premier Liu He was able to hedge after signing, saying that Chinese purchases would be “based on the market demand in China.” That is expected to drop sharply because of the economic downturn from the coronavirus quarantines.

The agreement also ignores one of the biggest problems in the trade relationship: Chinese subsidies of its manufacturers of steel, solar panel, and other key goods. And it excludes cybersecurity issues.

 On the positive side, the accord relaxes certain Chinese inspection and licensing rules that impeded imports of American seafood, poultry, meat, animal feed, and dairy products. It also takes a stab at stopping China’s theft of intellectual property by barring counterfeiting and copying pharmaceutical patents. It ends the requirement that to operate in China, American companies must form joint ventures that transfer technology and trade secrets. This is an excellent provision if observed.

The trouble is, enforcement will be difficult, because both countries have eschewed the neutral, international mechanisms contained in earlier trade agreements. This one creates a Chinese-American dispute office, whose solutions can be appealed higher in each government. But if no resolution is found, the whole deal is scrapped and the war of tariffs resumes.

Trade With Canada and Mexico. After railing against what he called “the NAFTA nightmare,” Trump fixated on his slogan, “Promises Made, Promises Kept.” So he tweaked the 25-year-old North American Free Trade Agreement, overstated the changes, and gave it a new name, the USMCA, the United States-Mexico- Canada Agreement. Some of the revisions most beneficial to workers were inserted at the insistence of the Democratic majority in the House.

The agreement gradually raises from 62.5 percent to 75 percent the content of a vehicle that has to be made in North America to avoid U.S. tariffs, a nominal improvement, since cars can still be assembled in Mexico. In addition, to escape duty, cars must have 40 to 45 percent of their parts made in factories paying at least $16 an hour. But that’s an average, so managers getting high pay can distort the figures. And the $16 won’t rise with inflation.

Side letters attached to NAFTA are now part of the main agreement: the right to organize unions, for example, and prohibitions of forced labor, which Mexico agreed to enact into law. The question is how effective enforcement will be.

Other adjustments include slightly improved American and Canadian access to each other’s dairy markets, and this blockbuster: Stores in British Columbia are now barred from selling local wines only, and must offer American wines as well. Another change raises to 70 years, from 50, the protection of copyrights, including criminal penalties for the theft of trade secrets, and there’s a bevy of provisions that weren’t relevant before the internet, including a ban on duties on electronic transmissions—but also a problematic protection of social media platforms against lawsuits over user content.

These are mostly improvements, just not quite the grand scrapping of NAFTA that Trump promised.

A Nuclear North Korea. Trump’s exaggerated confidence in his personal ability to persuade by embarrassing flattery was on display during his meetings with North Korean dictator Kim Jong-un. At a political rally in West Virginia, he told the roaring crowd that “we fell in love—no, really. He wrote me beautiful letters.” At another point, he claimed to have obtained a pledge from Kim for a “complete, verifiable, and irreversible denuclearization.” To some supporters at Trump rallies, this boast translated into certainty as they told reporters that peace with North Korea was one of Trump’s accomplishments.

Is Trump as credulous himself, or is he just starring in an unreality show? Whichever it is, the national security interests are not served. Kim has taken Trump and his supporters for a ride, especially in the ruse of theatrically demolishing a nuclear test site just before one of their meetings.

If Trump ever listened to specialists who have deep experience with a country or an issue, he would have recognized this as no great concession, since the country’s nuclear program could advance without new tests, the site could be reopened, or testing could be done elsewhere. In any event, missile tests have continued, and the Trump-Kim love affair seems to have ended.

Trump's eagerness for international deals would be admirable if he knew how to make them and could see the difference between a substantive success and a mirage. He is betting that enough of the electorate can't tell the difference either.