Months of negotiation finally lead to the first phase of the US-China trade deal on Wednesday last week. In the 86 paged document, China promises to buy USD 200bn of US goods over the next two years and the US to reduce the tariffs on USD 120bn Chinese products. The deal also promises better defense for US intellectual property and better access to the Chinese financial market.
President Trump stated that the deal is a step towards “righting the wrongs of the past” as a more fair and just agreement is being made between the two countries. As part of China’s promise to increase the purchases of US goods are USD 32bn in farm goods such as meats, grains, soybeans and cotton. It also includes USD 52.4bn in energy products and USD 77.7bn in additional manufacturing purchase like aircrafts, cars, steel, equipment, parasitical products.
The tariffs will remain in place for now but the US commits to cutting them in half for over USD 120bn on Chinese products. The President shares his plans to take them down as part of the next phase of the deal:
We’re leaving tariffs on but I will agree to take those tariffs off if we are able to do phase two.
As part of the deal, China agrees to increase the protection of intellectual property by adopting better measures and criminal penalties for patent infringement, copyright theft and counterfeiting. The deal does not contain any specific promises to combat cyber crime even though it is one of the biggest issues the US had with China, critics say.
US companies will no longer be forced to hand over their technology to gain access to Chinese markets. This practice has caused substantial losses for US companies in the past and although China has previously promised to abandon it, there have been violations. The deal will now make sure China sticks to this agreement.
China has also pledged to allow foreign financial services firms to have bigger stake in its financial market by opening up access to banking and electronic payment services, insurance and asset management. The US has also promised China to receive better treatment on the US market as part of the trade deal ensuring Wall Street’s support for it.