US labour leader warns of ‘inferior’ China trade deal

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Richard Trumka, America’s top union leader, has warned Donald Trump that he risks striking an “inferior agreement” with China to end the trade war if he fails to rein in Beijing’s use of industrial subsidies, raising pressure on US negotiators in the final stretch of talks with Beijing.

The 69-year-old president of the AFL-CIO said the deal being hashed out between US and Chinese officials did not seem to contain anything “very earth shattering or very helpful” to rebalance the trade relationship between the two countries, he said in an interview with the Financial Times.

In particular, he urged Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, to secure binding commitments from China to prevent currency manipulation and restrain the use of industrial subsidies. Some currency measures are expected to be included in the deal, but big curbs to subsidies are not thought to be part of the agreement, according to people familiar with the text.

“[The Chinese] circumvent comparative advantage by underwriting the cost of their uncompetitive industries or by targeting an industry and subsidising [it]. That has to come to a screeching halt,” said Mr Trumka. “If the agreement doesn’t do that, and gives us a way to enforce it, then it will be an inferior agreement. And it’ll be another opportunity, a great opportunity, missed.”

Mr Trumka’s reservations are significant because they highlight the risk of a political backlash against Mr Trump if he is seen as striking a weak deal.

While US labour unions generally favour Democrats, they have been sympathetic to the president’s protectionist stance on trade. A rejection of the China deal by Mr Trumka, who has led the AFL-CIO labour federation for a decade, would be a big blow to Mr Trump’s hopes of … Read More...