US President Donald Trump and Chinese Vice Premier Liu He signed the phase one trade deal Wednesday morning at the White House, signalling a truce, but not the end, in the nearly two-year-long trade war between the world’s two biggest economies.
The signing concluded lengthy on-and-off negotiations and formalised an 86-page agreement reached in December in which the US agreed to halve tariffs on USD 120 billion of Chinese goods to 7.5 per cent and suspend plans for other tariffs. China, for its part, pledged to buy USD 40 billion of agricultural products from the US, among other market-opening commitments.
These goods include USD 32 billion in American farm products and seafood, almost USD 78 billion in manufactured goods like aircraft, machinery and steel, along side USD 52 billion in energy goods.
“Today, we take a momentous step, one that’s never taken before with China,” that will ensure “fair and reciprocal trade,” Trump said at the White House before signing the document.
The agreement also contains provisions to ease regulatory barriers for trade in infant formula, beef, pork, seafood and agricultural biotechnology.
The agreement also provides for sanctions over the theft of trade secrets and for China to formally ban cyber-theft, the unauthorised disclosure of trade secrets and the use of stolen trade secrets.
So-called “forced” technology transfers were also dealt with in the document. Both US officials and businesses have long complained of China’s unstated policy of forcing foreign businesses to surrender technological know-how in return for permission to operate in the vast China market.
The agreement signed on Wednesday stipulates that neither side will force persons from the other to transfer technology “in relation to acquisitions, joint ventures, or other investment transactions.”
It also calls for the creation of a mechanism for resolving disputes over medicine patents. There are also provisions to prevent counterfeiting, including counterfeit medicines, and online copyright infringement.
Also included are financial services under which China will make it easier for US banks to underwrite the debt of Chinese firms and lower barriers to market entry for certain investment services.
Additionally, China agreed to allow US electronic payment services like Mastercard, Visa and American Express to apply to become bank card clearing institutions.
By April of 2020, China is to allow wholly-owned US companies to participate in the life, pension and health insurance sectors.
And touching on accusations made by Trump that China was manipulating its currency in order to gain trade advantages, the agreement also commits both sides to abide by the International Monetary Fund’s principles on avoiding the manipulation of exchange rates.
The two say they will work to achieve market-determined exchange rates and refrain from competitively cutting their value of their currencies.