The next phase of china US trade deal…

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Samia Zaman

United States President Donald Trump and Chinese vice Premier Liu He signed a phase one trade deal in Washington that hits pause on more than two years of escalating trade tensions. China pledged to buy more US products while the US called off additional tariffs on Chinese goods, among other measures agreed between the two sides. While the US president hailed the pact as the biggest deal anybody has ever seen.  Chinese officials and state media described it in much more cautious terms. President Xi Jinping described the new agreement as a sign that the US and China can resolve their differences with dialogue, stating in a message delivered by Liu that the two countries had made progress and should properly address each others’ concerns to push bilateral ties on the right track. As part of the deal Beijing has promised to increase purchases of US products and services by an additional $200bn over the next two years. While the pact halts new tariffs, it leaves in place the bulk of levies on $360 billion worth of Chinese products. Retaliatory Chinese tariffs on over $100 billion in US goods also remain unchanged. The deal, sealed on the same day the House voted to refer articles of Trump’s impeachment to the Senate, seems most focused on arriving at peace in the trade war. Among its requirements is a resumption of the economic dialogues that past administrations have held with China. Business groups broadly welcomed the agreement. But the lack of clarity on where things would go next also led many to call for those to be pursued more urgently so that tariffs could be lifted. The U.S. Chamber of Commerce said it was critical for the two sides to begin negotiations on a second phase as soon as possible. Some of the commitments contained in the 86-page document, which has eight chapters and a preamble, echo previous pledges made by China at the WTO or in G20 summits, and repackage steps Beijing had already been taking towards more open markets. China agreed to beef up its intellectual property protections in several ways to make it easier for US companies to seek recourse in both civil and criminal proceedings for the theft of trade secrets, without disclosing confidential business information. The deal also includes stricter measures related to patents, trademarks and geographical indications to prevent piracy and counterfeiting.  The last chapter of the trade deal includes formalities such as the deal coming into effect 30 days after it is signed and giving the US and China the right to scuttle the agreement within six days. It also states that Washington and Beijing will agree on the timing of new negotiations although no timeline is given. The provisions of the deal are subject to an enforcement mechanism that calls for several rounds of consultations. If the two sides don’t reach an agreement, the complaining party could take “remedial measure in a proportionate way” trade lingo for re imposing tariffs. In practice, the U.S. would likely be the party bringing the complaint because it is China that is pledging to make changes and increase purchases. The Trump administration said that the Phase 1 deal is a solid start that includes Chinese commitments to do more to protect intellectual property, curb the practice of forcing foreign companies to hand over sensitive technology and refrain from manipulating their currency lower to benefit Chinese exporters. In advance of the Phase 1 signing, in fact, the Treasury Department dropped its designation of China as a currency manipulator. This new phase of deal has brought new hopes along. There are few skeptical thoughts as well regarding the success and practical aspect of the deal but still it’s a good start. Optimists hope that resolution of the central problems in the bilateral trade dispute will become easier down the road. However, trade experts are not so sure there will be a rush of businesses eager to navigate the intricacies of the trade deal. Hopefully things will emulate better paths for further de-escalation.

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