What's in phase one trade deal

CHINA PURCHASES

China agreed to increase purchases of American products and services by at least US$200 billion (S$269 billion) over the next two years.

China bought US$130 billion worth of US goods in 2017, before the trade war began, and US$56 billion in services, US data shows.

China has committed to US$77.7 billion in additional manufacturing purchases over two years, from the 2017 level, the text says, which will be a US$32.9 billion increase this year and a US$44.8 billion increase next year.

China has committed to at least US$52.4 billion worth of additional energy purchases over the two years, from a baseline of US$9.1 billion in 2017.

China will also purchase US$37.9 billion in services from US companies over the two years.

China "shall ensure" additional purchases of US agricultural products by US$32 billion over two years, the deal says. That would give an average annual total of about US$40 billion, a number that United States President Donald Trump has touted before.

TARIFFS

The US will cut by half the tariff rate it imposed on Sept 1 on a US$120 billion list of Chinese goods, to 7.5 per cent.

US tariffs of 25 per cent on US$250 billion worth of Chinese goods put in place earlier will remain immediately unchanged. These could be rolled back as part of a phase two trade negotiation.

Tariffs that were scheduled to go into effect on Dec 15 on nearly US$160 billion worth of Chinese goods, including mobile phones, laptop computers, toys and clothing, have been suspended indefinitely.

 
 

China's retaliatory Dec 15 tariffs, including a 25 per cent tariff on US-made vehicles, have also been suspended.

INTELLECTUAL PROPERTY

The deal includes stronger Chinese legal pro-tection for patents, trademarks and copyright, including improved criminal and civil procedures to combat online infringement, and pirated and counterfeit goods.

The deal contains commitments by China to follow through on previous pledges to eliminate any pressure on foreign companies to transfer technology to Chinese firms as a condition of market access, licensing or administrative approvals, and to eliminate any government advantages for such transfers.

China also agreed to refrain from directly supporting outbound investment aimed at acquiring foreign technology to meet its industrial plans.

CURRENCY

The currency agreement contains pledges by China to refrain from competitive currency devaluations and to not target its exchange rate for a trade advantage - language that China has accepted for years as part of its commitments to the Group of 20 major economies.

As part of the deal, China has made "enforceable commitments to refrain from competitive devaluation" and agreed to publish relevant data on exchange rates and external balances, the US Treasury said on Monday.

The deal subjects any violations of currency commitments to the agreement's enforcement mechanism, under which they could incur US tariffs.

CHINA FINANCIAL SERVICES

US officials said the deal includes improved access to China's financial services market for US companies, including in banking, insurance, securities and credit rating services.

 
 

China, which has pledged for years to open up its financial services sector to more foreign competition, said the deal would boost imports of financial services from the US.

ENFORCEMENT

The US and China will resolve differences over how the deal is implemented through bilateral consultations, starting at the working level and escalating to top-level officials.

If these consultations do not resolve disputes, there is a process for imposing tariffs or other penalties.

US Trade Representative Robert Lighthizer told reporters that the US expected neither side would retaliate if appropriate action was taken as part of the process and following "consultation in good faith".

REUTERS, BLOOMBERG

 
A version of this article appeared in the print edition of The Straits Times on January 17, 2020, with the headline 'What's in phase one trade deal'. Print Edition | Subscribe