Phase One Trade Deal: Assessment and Details
Introduction
Former U.S. President Donald Trump directed federal agencies to evaluate China's adherence to the Phase One trade agreement (signed in 2020). This assessment stems from Beijing's failure to meet target purchases under the deal amidst the COVID-19 pandemic.
Key Terms of the 2020 Phase One Trade Deal
Tariff Reductions
* Halved tariffs imposed in September 2019 on $120 billion worth of Chinese goods (to 7.5%).
* Suspended tariffs scheduled for December 2019 on nearly $160 billion of Chinese imports (e.g., cellphones, laptops, toys, clothing).
* Maintained 25% tariffs on $250 billion of Chinese imports.
China's Purchase Commitments
* Increase purchases of U.S. exports and services by $200 billion over two years (baseline: 2017).
* Continue increased imports after 2021.
* China's imports in 2020 and 2021: $135 billion and $178 billion, respectively.
Intellectual Property Protection
* Enhanced legal protections for U.S. patents, trademarks, and copyrights in China.
* Pledge to eliminate pressure on foreign companies to transfer technology for market access.
* China to refrain from direct support for outbound investment aimed at acquiring foreign technology.
Currency Provisions
* China to avoid competitive currency devaluations and exchange rate manipulation for competitive advantage.
* Enforcement mechanism for currency violations, including potential tariffs.
* Bipartisan agreement to publish exchange rate and external balance data on a regular basis.