A productive start to U.S.-China talks

The mini-deal on U.S. trade with China announced by Commerce Secretary Wilbur Ross last week deserves a cautious welcome. It’s narrow in scope, and the reasoning behind it, as related by Mr. Ross, is questionable at best, but it gets the main thing right: It expands rather than contracts the opportunities for mutually beneficial commerce. One can only hope that the rest of President Donald Trump’s trade initiatives work out the same way.

The deal is described as the first installment of a wider effort to reform U.S.China trade relations. If fully implemented, these initial measures will give U.S. producers better access to China’s markets for natural gas, financial services and beef. In return, Chinese producers of cooked poultry will be allowed to export to the U.S. market, Chinese banks will get the same treatment from U.S. regulators as other foreign banks, and the U.S. won’t discriminate against direct investment by Chinese entrepreneurs.

That’s right, it’s trade liberalization — admittedly on a small scale, but any kind of opening is better than the tightening the Trump administration had led people to expect.

Negotiations on a wider agreement are set to continue, and there’s no guarantee that they’ll yield more of the same. Many mistakes are just waiting to happen. The administration recently opened a national-security investigation of steel imports, for instance: Hitching national-security concerns to a liking for old-fashioned protectionism is an ominous development. Nonetheless, this is a surprisingly productive start to the U.S.-China talks.

Churlish as it may seem, it’s worth noting that the administration’s explanation of the benefits is mistaken: That’s why further progress can’t be taken for granted. Mr. Ross emphasized, as he usually does, that the measures are intended to reduce the bilateral U.S. trade deficit with China. That should never be the test of trade policy.

The overall trade deficit is driven not by measures such as import restrictions or export promotion, but by macroeconomic factors. A country that consumes more than it produces, like the U.S., will have a deficit regardless. Concentrating on the bilateral balance is even more misguided, because even a country with balanced overall trade would expect to run surpluses with some and deficits with others. Far from being a problem, that’s a good thing: It means countries are specializing, and deriving the full benefits of trade.

Apparently, the administration still doesn’t get it, so the good news on trade may not last. Enjoy it while you can.