China and US reach Phase One trade agreement

The Office of the United States Trade Representative (USTR) has announced that the United States and China have reached a “historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services and currency and foreign exchange.”

The USTR says China also has committed to making “substantial additional purchases of U.S. goods and services in the coming years.”

The Phase One trade agreement also establishes a dispute resolution system “that ensures prompt and effective implementation and enforcement,” according to the USTR. 

“President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully enforceable structural changes and begins rebalancing the U.S.-China trade relationship,” United States Trade Representative Robert Lighthizer says. “This unprecedented agreement accomplishes those very significant goals and would not have been possible without the president’s strong leadership.”

“Today’s announcement of a Phase One agreement with China is another significant step forward in advancing President Trump’s economic agenda,” says Secretary of the Treasury Steven Mnuchin. “Thanks to the president’s leadership, this landmark agreement marks critical progress toward a more balanced trade relationship and a more level playing field for American workers and companies.”

The United States first imposed tariffs on imports from China based on the findings of the Section 301 investigation into China’s acts, policies and practices related to technology transfer, intellectual property and innovation. The U.S. says it will maintain 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.

The USTR released a “fact sheet” on the agreement

CBS News reports that of the nearly $500 billion in goods the U.S. imports from China every year, approximately $370 billion are currently subject to tariffs.

The deal, which was announced Dec. 13, forestalls further U.S. tariffs on an additional $160 billion in Chinese imports that were initially supposed to go into effect Sunday, Dec. 15, the news outlet reports.

On the issue of technology transfer, the agreement “sets out binding and enforceable obligations to address several of the unfair technology transfer practices of China that were identified in USTR’s Section 301 investigation,” the fact sheet notes. “For the first time in any trade agreement, China has agreed to end its long-standing practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals or receiving advantages from the government.”

According to the fact sheet, the chapter on expanding trade “includes commitments from China to import various U.S. goods and services over the next two years in a total amount that exceeds China’s annual level of imports for those goods and services in 2017 by no less than $200 billion. China’s commitments cover a variety of U.S. manufactured goods, food, agricultural and seafood products, energy products, and services. China’s increased imports of U.S. goods and services are expected to continue on this same trajectory for several years after 2021 and should contribute significantly to the rebalancing of the U.S.-China trade relationship.”

CBS News reports, “Stocks have reacted tepidly to the U.S.-China trade deal,” and notes that it “expects the deal to provide a modest boost for U.S. economic growth next year.”

Others remain skeptical that a more substantial deal will be reached between the U.S. and China, according to CBS News. The news network quotes Robert Daly, director of Washington think tank the Kissinger Institute at the Wilson Center: “The fighters have retreated to their corners and may not return to the ring. The Trump administration is calling this 'Phase One' of a trade deal with China, but there is little reason to expect a Phase Two or Three. The Chinese side has already won a respite from continual American threats and appears to have done so without offering any terms it wasn't prepared to give in 2017.”