U.S. and China Trade Deal – Phase 1
The United States and China had high level negotiations October 10-11, 2019 and reached a “Phase 1” agreement. President Trump met with Vice Premier Liu He at the White House, and mentioned, ‘We had a very, very good negotiation,” according to the Wall Street Journal. Moreover, the New York Times mentions that President Trump states it is a fantastic deal that American businesses will benefit from, however the details and scope of the agreement were still unclear.
The agreement will take several weeks to become official, but here is what is rumored to be included:
- The U.S. will postpone or no longer increase the Section 301 duty rate from 25% to 30% on Chinese imports List 1, 2, and 3 on October 15, 2019 as originally planned.
- The U.S. still plans to impose the Section 301 additional tariff of 15% on Chinese imports List 4B scheduled for December 15, 2019, unless talks continue in the right path.
- China agreed to purchase an additional $40-50 billion in U.S. agricultural products per year
- China pledged to open its markets to American financial service firms which would allow high levels of foreign ownership or even remove ownership caps that are currently in place
- The “Phase 1” Agreement would include a “Phase 1” approach to intellectual property, starting with stronger protections for copyrights and patents, then adding more protections in other phases of the agreement.
- The “Phase 1” Agreement includes new guidelines to help resolve China’s currency manipulation
- The U.S. has always been concerned about the enforcement of such agreements with China. In order to move forward, and according to NYTimes, “American officials have emphasized that their current tariffs, and the threat of future ones, will act as an enforcement mechanism. If China violates the agreement, the Trump administration could move forward with additional tariffs on Chinese products. And if China follows through on its promises, some of Mr. Trump’s existing tariffs could be rolled back.”
The two countries plan to continue to work on a mutually beneficial and official trade deal. President Trump and President Xi Jinping both plan to attend the Asia-Pacific Economic Cooperation summit in Chile in mid-November. Rumors are indicating they may sign the deal on November 17, 2019.