Regional Asian exporters could be ‘crowded out’ in US-China trade pact

“In the case of an agreement involving managed trade, with China committed to import more from the US, reducing imports from elsewhere can be an issue,” Changyong Rhee, head of the IMF Asia Department, told reporters during the fund’s spring meetings with the World Bank.

“There could be negative impacts on other countries whose exports to China would be crowded out by US exports.”

Washington and Beijing have been in talks since the start of the year to resolve their nine-month trade war.

Beijing has floated offers to make eye-popping purchases of US agricultural and energy exports as a means of cutting its soaring trade surplus with the United States.

President Donald Trump has been outraged by the US trade deficit with China, which has increased despite the punishing tariffs he imposed last year on Chinese imports.

Countries such as Vietnam, Thailand, Malaysia and Mongolia are crude exporters to China, suggesting they could lose market share should US exports to China increase.

Rhee also said Friday that formal bilateral purchase agreement would be a departure from the prevailing rules governing international trade.

“Likewise if the deal involves preferential access for the US to the Chinese markets, this could lead to broader worries about the future of the multilateral trade system,” he said.