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U.S. Trade Representative Robert Lighthizer, right, and White House Director of Trade and Manufacturing Policy Peter Navarro arrive at the Office of the U.S. Trade Representative, in Washington, D.C., on Feb. 19, 2019.JIM WATSON/AFP/Getty Images

Margaret McCuaig-Johnston is a Distinguished Fellow at the Asia Pacific Foundation of Canada and a Senior Fellow at the China Institute, University of Alberta

The unhappiest men in Washington are not, as you might expect, President Donald Trump and his lawyer Rudy Giuliani, who are under intense pressure for their actions regarding Ukraine. Rather the unhappiest men have to be Robert Lighthizer and Peter Navarro, the U.S. trade representative and White House director of trade and manufacturing policy respectively. The trade deal announced by Mr. Trump on Friday was no deal at all from their perspective.

We all remember when Mr. Trump went to China in 2017 – red carpets were rolled out, gilt signs embossed with his name were hung and President Xi Jinping became Mr. Trump’s new best friend.

Then, in 2018, Mr. Lighthizer and Mr. Navarro wrote searing reports on the Chinese business tactics that had taken advantage of American firms in myriad ways. These reports gave substance to the anti-China rhetoric that Mr. Trump had used during the election campaign and this won Mr. Trump’s attention back.

Mr. Lighthizer’s measured, comprehensive Section 301 report in March of last year, followed by an update report in November, was a strong account of aggressive Chinese business practices. These included forcing U.S. firms into joint ventures rather than allowing them to have wholly foreign-owned enterprises in China; making them reveal their core intellectual property to their Chinese partner, without that partner having to reveal their own IP; demanding that the products of joint ventures be branded in the Chinese partner’s name; IP being shared by government authorities with competitor companies; and many other business practices not found in other countries. Mr. Navarro’s report in June of last year used stronger language in documenting cases such as cyber hacking of firms, evasion of U.S. export controls, counterfeiting and physical theft of technologies.

In April of this year, U.S. Trade Representative (USTR) invited me to come to Washington to brief officials involved in the negotiations. My own research has covered dozens of Canadian firms that have experienced the same problems and worse. Most often their joint venture ownership ratio was unbalanced, giving the Canadian firm only 10, 20, 30 or 40 per cent share when it was 100 per cent the Canadian technology being manufactured. And over time, the Chinese partner often tried to take over the whole joint venture leaving the Canadian company without its technology still being made in the Chinese market. So I was hoping that the heavy guns of USTR and the White House could bring about a shift in Chinese business practices that would benefit all Western firms, including Canada’s.

But on Oct. 3, the lead negotiator for China, Vice-Premier Liu He, told visiting dignitaries that he would not include in his negotiating package any commitments on reforming Chinese industrial policy or state subsidies. That seemed to kill the prospect of progress on the issues raised in the USTR and White House reports.

When we heard that Mr. Trump would meet with Mr. Liu at the White House on Friday, it was clear that the President was hoping for a new trade deal – no doubt the biggest and the best trade deal ever. The Chinese wanted an agreement and Mr. Trump needed one as a distraction from his other problems. It was a disappointment, however, that this is only a phase one agreement, with the Oct. 15 tariff hike called off by the President.

To our dismay in Canada, however, it also includes US$40-billion to US$50-billion in agriculture exports from the U.S. to China. The Chinese people are not likely to eat that much more. Therefore, it can be expected that these exports will come at the expense of exports from other countries.

Given Canada-China relations at this time, Canadian agricultural products, already hurting from Chinese bans, can expect to be at the top of the list of those exports to be displaced by sales of American products. Already Chinese purchases of U.S. soybeans and pork are up – two Canadian products that have been hit by the Chinese bans. While we have been paying the price these past 10 months for the American request that we extradite Huawei chief financial officer Meng Wanzhou, a bigger cost in our own agricultural exports could be just ahead.

We should expect that this issue will be on the top of the agenda for the newly elected prime minister with a more aggressive President Xi and less engaged President Trump. And we can be sure that Mr. Lighthizer and Mr. Navarro will also be looking to engage both their own President and the Chinese trade delegation on China’s aggressive business practices as a phase two of their negotiations. Canadian firms should wish them more success next time.