China Demand For ‘Other Unforeseeable Event’ Out In Trade Deal Was Possible Red Flag

"Force majeure" language is common in contracts, but rare in trade agreements, and was possibly another missed sign of the coronavirus outbreak in China last year.

WASHINGTON — As negotiators wrapped up the framework of President Donald Trump’s vaunted trade deal in December, China may have provided a missed clue about the coronavirus outbreak already unfolding there: insistence on a provision allowing for an out in case of “a natural disaster or other unforeseeable event.”

Such “force majeure” language, while common in commercial contracts, is rare in trade agreements, particularly between two countries with economies so large that they are essentially immune to localized floods and droughts.

No such provision existed in the massive Trans-Pacific Partnership negotiated under former President Barack Obama, nor in the United States-South Korea agreement modified under Trump. A limited provision was included in the revised North American Free Trade Agreement under Trump in the food export section for the purpose of ensuring “food security.”

But the language insisted upon by China in December, according to an informal adviser close to the White House who spoke on condition of anonymity, creates an exit path for the entire agreement, and should have been seen as another warning sign about the coronavirus outbreak.

“In the event that a natural disaster or other unforeseeable event outside the control of the parties delays a party from timely complying with its obligations under this agreement, the parties shall consult with each other,” it reads.

Trump, eager to seal the China deal, did nothing to push China for details about the virus, and instead praised its dictator, Xi Jinping, for his “transparency” about the matter, the adviser said. “The whole month of January was lost,” he said.

The White House, the Treasury Department and the United States Trade Representative’s office did not respond to multiple queries about the provision.

The informal adviser and other critics said it should have been seen as yet another red flag missed by Trump in his zeal to finalize a deal to partially unwind his trade war against China ahead of the 2020 presidential election. Multiple published reports — which Trump’s White House has not refuted — have found that the National Security Council began getting word of the new disease outbreak in late November, and that the first mention of the coronavirus threat entered Trump’s “President’s Daily Brief” in early January.

That document is the basis for the president’s intelligence briefing, which under previous presidents was a daily, early morning fixture but which under Trump appears to be happening only occasionally, and typically in the mid-afternoons on those days when it does take place.

A HuffPost review of Trump’s schedules for January shows no briefing until Jan. 6, and a total of nine all month. White House officials claim that just because there was no briefing on the schedule does not mean that Trump did not have one. But they decline to list the dates that he received one — or to explain why an intelligence briefing shows on the schedule at all on some days but not on others.

“As the virus spread, Trump wasted crucial weeks neglecting warnings from his own intelligence experts and praising China’s containment efforts as successful and transparent,” said Andrew Bates, a spokesman for presumptive Democratic nominee Joe Biden. “Trump was soft on China during the worst public health crisis in over 100 years, all to protect his trade negotiations with them that he thought would help him win reelection.”

Outside trade experts, though, said they were not particularly surprised that China insisted on such a provision in this deal. Unlike most trade pacts, which are mutual agreements to lower or eliminate tariffs, the U.S.-China accord is essentially a promise from China to buy a certain quantity of U.S. goods in exchange for reduced U.S. import tariffs.

“This is not a trade agreement. This is more like a hostage situation,” said Mary Lovely, an economics professor at Syracuse University specializing in international trade.

Trump, who campaigned on the falsehood that all other countries “rip off” American taxpayers by running trade surpluses with the United States, began his trade war with China in 2018 by increasing tariffs on its imports. That move resulted in higher costs to American consumers and wound up devastating farmers, who lost billions in sales to China after it raised retaliatory tariffs.

While Trump has ordered a total of $28 billion in bailouts to farmers thus far — while falsely claiming that the money came from China, and not U.S. taxpayers — those funds have not made up for the losses growers have suffered. Trump’s approval ratings in key agricultural states like Wisconsin and Iowa have suffered, and he had been pushing hard last year for a deal with China as an accomplishment to use in his reelection.

That politically driven effort, critics said, was why Trump declined to criticize China through the signing of the agreement on Jan. 15, and even through this day, for covering up the severity of the outbreak in Wuhan and not sharing information about the virus with outside health experts.

Trump has repeatedly criticized Democrats in Congress, mayors and governors, the news media and Obama for the pandemic, even while he continually praised Xi for his actions to contain the disease — even though Xi did not contain the disease, and, in fact, his coverup efforts led to its spread around the world. On Tuesday, Trump attacked the World Health Organization for failing to warn the world about the threat, but still continued to defend China.

Asked why he was praising Xi for being “transparent” when he had not been, Trump answered: “Well, I did a trade deal with China, where China is supposed to be spending $250 billion in our country.”

But trade experts said that figure would have been an unlikely reach for China even before the pandemic. The deal calls for $50 billion in annual agricultural purchases, for example, which is twice what China bought from U.S. farmers in its peak year.

“I thought it was always a stretch. But with the coronavirus, it seems even more unobtainable,” said Wendy Cutler, who worked in the USTR’s office for decades and helped craft the TPP under Obama.

And the structure of the agreement leaves Trump with no recourse should China to fail to hit that purchase goal other than simply canceling the agreement and jacking tariffs back up again — which would hurt American manufacturers, consumers and farmers anew.

“Trump placed cementing and selling his trade deal with China, which he immediately touted as evidence he should be re-elected, ahead of preparing the United States for the impending pandemic,” said former CIA analyst Ned Price, who served as a National Security Council spokesman under Obama. “He’s continued to treat Xi with kid gloves for the same reason, namely that he needs to be able to tout the deal in the run-up to November.”

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