The year is ending with a phase-one economic and trade agreement between the United States and China that has replaced the gloom in world trade with a great measure of optimism. The problem in US-China trade relations is not over yet. The agreement announced last December 13 is only the first phase of a deal which must now be pursued in the coming months before we can say the 20-month trade war is over.
Basically the phase-one deal suspended new tariffs, including the ones scheduled to begin last December 15. China agreed to increase its purchases of US goods and address US concerns related to intellectual property protection, currency manipulation, and agriculture.
China’s state news agency Xinhua said the text of the agreement included nine chapters – the preface, intellectual property rights, food and agricultural products, financial services, exchange rate and transparency, trade expansion, bilateral assessment and dispute settlement, and the final terms.
In turn, the Office of the US Trade Representative said the phase-one deal called for “structural reforms and other changes in China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.”
US President Donald Trump and China President Xi Jinping spoke with each other by telephone on the next stage after phase one of the deal.
President Xi later said there are bound to be some differences in the coming talks but as long as the two nations respect each other’s national dignity, sovereignty, and core interests, they will overcome any difficulties.
President Trump was reportedly more optimistic. He announced on Twitter: “We will begin negotiations on the Phase-Two Deal immediately, rather than waiting until after the 2020 election. This is an amazing deal for all. Thank you!”
On this very positive note, the new year will begin for the world’s two biggest economies. In the last 20 months, their trade war, featuring exchanges of tariffs, threats, and mounting uncertainties, have depressed not only the two economies but also those of the rest of the world, with an economic slow-down that was beginning to affect smaller trading nations like ours.
The problem is not quite over but a great start at solving it has been made.