As the Chinese trade delegation makes their way to Washington, DC this week, negotiators on both sides aren’t hoping for a deal, they’re hoping for a memorandum of understanding.
While many analysts are saying the inclusion of the words memorandum of understanding (MOU) in a statement from the White House signals we’re far from a deal, Pro Farmer policy analyst Jim Wiesemeyer said it could be a signal of progress.
“You have to have an overall MOU before you put flesh on it relative to getting a framework agreement, and then even flesh that out even more in final talks,” he said in last week’s Signal to Noise podcast. “That's why this week's talks are critical.”
The importance of the MOU is that, for the first time, we'll have progress on paper, Wiesemeyer said.
“Then they can take a follow up. If there's a framework of agreement that can be discussed, then the most sensitive issues can eventually be dealt with, in a possible summit between President Trump and Chinese leader Xi Jinping,” he explained. “So we have several more steps to go.”
Chinese leaders and President Trump were more happy about the progress made last week in Beijing than the actual negotiators, he added.
“While they were not negative, they kept on signaling limited progress was made and very limited concessions from China,” he said. “So while some sort of a framework deal or extension of the talks is likely by the March 1 deadline to avoid the new and increased tariffs, I just haven't seen the specifics that would up the odds of a bonafide agreement that that can be written down.”
According to Wiesemeyer, an MOU could also be the first look at promises from China to purchase American goods including soybeans.
“We could possibly find out tonnages and such, which would be friendly to the market,” he said.