US and China Finally Agreed on Phase One Trade Deal Terms
The phase one trade deal between the US and China is all set. Some of its provisions focused on reducing US tariffs on Chinese products, addressing US complaints regarding intellectual property practices, and boosting Chinese acquisition of American agricultural goods.
According to the deal, China planned to increase purchases of US agricultural goods by $32 billion for the next two years. Trump urged China to buy US agricultural products worth $50 billion every year. China didn’t guarantee to meet the exact amount of purchase but the country agreed to increase its purchases by $5 billion every year to get as close to the $50-billion target.
When it comes to tariffs, the US canceled the 15% tax scheduled to take effect this Sunday on $160 billion Chinese products, including but not limited to laptops, cellphones, and toys. In response, China would also not proceed with its 25% tariff on automobiles made in the US. What’s more, the States would cut the tariff rate on $120 billion Chinese goods by half; this applies only to the US taxes imposed starting September 1st.
As mentioned earlier, the phase one trade pact also included provisions regarding intellectual property practices. There would be stronger protections for China’s patents, copyrights, and trademarks. Civil and criminal procedures to prevent pirated or counterfeited products and online infringement would also be bolstered.
There were issues before regarding China putting pressure on international firms to transfer technology to Chinese companies in exchange for market access and licensing approvals. China already made pledges to eliminate this activity and the phase one trade deal also contains commitments from China to keep its promise.
Furthermore, the deal also addressed US complaints about investment barriers in China’s financial services. Now, access to China’s financial market is expected to become wider; US companies can invest in insurance, banking, and credit rating services.
China also promised to open up its financial services market to more foreign competition. However, not all financial firms would be able to take advantage of this. Probably, countries that China considers allies would have an easier time tapping on its financial market.