Congress just kicked Trump's trade deal in the teeth for all the right reasons

llopez@businessinsider.com (Linette Lopez)
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  • Over the past few weeks Congress has passed two bills that ensure President Donald Trump's dreams of a trade deal that would reshape the Chinese economy are dead.
  • The bills condemn the Chinese government for political repression and violence in Hong Kong and Xinjiang, a province in Western China. As such, to Beijing they represent a violation of Chinese sovereignty.
  • Here in the US, the bills should represent a commitment to US values.
  • And politically, they show that US sentiment toward China has darkened to the point where even Republicans know they cannot be seen as soft on the country — even when it means destroying one of the Trump administration's most important initiatives.
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If — and it's a big if — President Donald Trump gets his "phase-one trade deal" with China, there will be no "phase two." He'll suffer this loss, in part, because Congress passed two bills standing up for human rights on Chinese territory. The US is a better country for it.

The two bills angered Beijing by stepping on the third rail of Chinese politics: China's territorial integrity. It's a red line that Washington, and the Trump administration, have been warned of in no uncertain terms.

In 2017, Lu Kang, an official in the Chinese Ministry of Foreign Affairs, gave a rare American interview to NBC News and made it clear that Beijing would be happy to work with the new US president on any issue except one: Taiwan. To China, Taiwan is still a part of its territory. And the message was that any perceived threat to China's territorial integrity would not be tolerated.

Almost three years later it is not Taiwan that has Beijing crying foul over US interference on its land, but rather Xinjiang and Hong Kong. Both places have garnered international attention for the Chinese government's trampling of human rights in those regions.

The first bill addressing the two regions, passed a few weeks ago, is called the Hong Kong Human Rights and Democracy Act, and the legislation articulates US support for the months-long protests in Hong Kong. The second bill, passed last week, is the Uyghur Human Rights Policy Act. It condemns China's internment of Uighur Muslim minorities (also spelled "Uyghur") in "reeducation" camps in the country's western Xinjiang province.

After each bill was passed, China's propaganda machine went into overdrive. The country's Foreign Ministry didn't sound much different from the nationalist newspaper Global Times. For example, this week the Foreign Ministry representative Hua Chunying compared China's actions in Xinjiang to the US's anti-terrorism drive after 9/11 and reminded the US of its own past.

"What ignorance, what brazenness, what hypocrisy!" Hua said. "Have they forgotten? The two-century-long American history is tainted with the blood and tears of native Indians, who were originally masters of the continent."

So, if you were under the impression that working on the so-called phase one of the trade deal implied that there would also be a phase two, you can put that to rest. There will be no grand bilateral trade deal with China that opens up its economy through negotiation. The best we can hope for now is a cessation of hostilities, some small adjustments to how China treats US companies, and some agricultural purchases on China's part.

On one hand, this failure can ultimately be attributed, in part, to Congress' decision to stand up for American values. Good. On the other hand, it is a testament to the intense anti-China sentiment that has taken over Washington in the age of Trump — a sentiment that is bound to linger beyond his administration and change the tenor of relationships across the planet.

Mitch's House

The GOP-controlled US Senate is not supposed to pass bills that wreck a Republican president's agenda, especially in this age of Trump. But it did.

Both the Xinjiang and Hong Kong bills were passed by unanimous consent. That means they were not brought to the floor by Majority Leader Mitch McConnell as bills normally are. Under unanimous consent, any senator can bring a bill to the floor, but any of the other 99 senators can hold up the bill with a word.

But with the Xinjiang and Hong Kong bills, not a single senator stopped the passage of the legislation, which gave both bills veto-proof majorities.

"Train left the station and was moving full steam ahead, and the White House couldn't stop it," one Senate aide involved with the efforts to pass the Hong Kong bill told Business Insider. "The public sentiment in favor of Hong Kong and against China was too strong."

President Donald Trump, left, hugs Senate Majority Leader Mitch McConnell of Ky., right, as he comes up on stage during a campaign rally in Lexington, Ky., Monday, Nov. 4, 2019. (AP Photo/Susan Walsh)

Associated Press

McConnell couldn't stop the bills and risk looking weak when the legislation was most likely forced through anyway, and the White House couldn't find a senator willing to stand up and stop the passage. Compare that with a bill condemning the Armenian genocide, which — in part as an effort to placate the Turkish government — the White House has been able to stop three separate times using three different senators over the past few weeks.

Sources on Capitol Hill told Business Insider that members of both chambers of Congress were too afraid of looking weak on China to stop the bill. After all, for years the Trump administration has made it clear that the rivalry between the US and China was to intensify on virtually every front, attacking individual Chinese companies and the government alike.

"Trump stirred up an anti-China fever among Republicans, so they're all looking for ways to f--- with China," one House Democratic source told Business Insider, citing Congress' move to bar the purchase of Chinese-made buses and trains as an example.

But lawmakers "also realize that their districts stand to lose a lot if the trade war escalates," the person continued, adding that the balancing act of pleasing Trump "can only last so long."

Phase forever

You can be forgiven for not knowing exactly where we stand on phase one of the trade deal with China.

This week Bloomberg reported that the deal was close. Reuters said the Chinese were waiting for Trump to agree to roll back existing tariffs on Chinese goods. Commerce Secretary Wilbur Ross told CNBC that the deal still lacked details, that what the parties had on paper was a view "from 40,000 feet."

Trump himself said he might postpone the deal until after the 2020 elections, hoping for more leverage should he be reelected, and finally The Wall Street Journal reported that Jared Kushner — the president's son-in-law, adviser, and White House patron saint of hopeless causes — had added pushing phase one past the finish line to his seemingly ever-growing list of duties.

It's exhausting, and all roads lead to virtually nowhere. Here's the most optimistic scenario: The White House will not increase tariffs on China on December 15, meaning phase one could materialize next quarter if not this month. But it would require Donald "Tariff Man" Trump to roll back tariffs on China — something we have yet to see him do.

"We may have a deal, we may have a punt, I don't think we'll have a blowup," Leland Miller, the founder of the private Chinese business survey China Beige Book, told Business Insider.

And then there are the pessimists, who know the game is over regardless of what happens next. One former US State Department official who spent a career in Asia assumed the passage of the Hong Kong and Xinjiang bills meant Trump had given up on a deal altogether.

"There is not going to be a trade deal," the person said. "Someone should tell the markets."

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