In less than two days, the U.S. trade picture has made a massive turn for the better, with the Trump Administration marking two milestones: “Phase One” of a wider China deal, and the long delayed passage of the USMCA pack intended to replace the discredited NAFTA. News of the Senate’s bipartisan approval of USMCA came as no surprise, but was long awaited after the deal was hung-up in the House for a year before mutually agreeable changes were made to some environment and labor provisions. [The three signatory countries: the U.S., Mexico, and Canada had penned the agreement some 14-months ago. It now awaits only Canada’s final approval, after the President’s signature, for the pact to go into effect].
On Wednesday, January 15, the President signed the so-called “Phase One” portion of a larger Sino-U.S. trade deal that will have additional steps or elements to be negotiated in the coming years. Albeit thought unlikely by some who criticized the use of tariffs to bring the Chinese to the table, the monumental agreement signaled a more pragmatic tough-minded approach to dealing with the Chinese when it comes to the new realty of the 21st century, where China is now the second largest economy in the world and at best a competitive force to U.S. interests/security.
The White House released a summary of the key elements of “Phase One” China Trade Agreement:
The historic agreement will begin to re-balance our vital trade partnership with China and benefit both of our countries (more evenly or fairly). The signing of this agreement should be a boost for American businesses, farmers, manufacturers, and innovators.
ENACTING CRITICAL REFORMS:
China has agreed to make significant structural reforms in a wide range of critical areas.
(a) The agreement will help level the playing field for America’s innovators to compete and win (adding protections for intellectual property). Importantly, the reforms included in the pack are fully enforceable and include a strong dispute resolution system to ensure effective implementation and enforcement. For the first time in any trade deal, China agreed to end its practice of forcing foreign companies to transfer their technology to Chinese companies in order to gain market access.
(b) China will address numerous longstanding intellectual property concerns in the areas of trade secrets, trademarks, enforcement against pirated and counterfeit goods, and more.
(c) China agreed to strong commitments on currency practices regarding currency devaluations and exchange rates.
(d) The agreement addresses a wide range of trade and investment barriers that have prevented American financial services companies from being able to compete in China.
(e) The agreement addresses structural barriers that have unfairly limited United States food and agricultural exports; and
(f) The agreement also includes significant commitments by China on accepting United States agricultural biotechnology products.