On Friday, December 13, 2019, after almost a year of tense negotiations and escalating trade penalties, the United States and China have finally announced progress with Phase One of a new ‘historic and enforceable agreement.’
The United States first imposed tariffs on imports from China based on the findings of the Section 301 investigation on China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
Under Phase One of the new trade deal, structural reforms and other changes to China’s economic and trade regime are required in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.
The agreement also includes China’s commitment to making substantial additional purchases of U.S. goods and services in the coming years.
In exchange, the United States has agreed to modify its Section 301 tariff actions in a significant way. The U.S. will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.
“President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully-enforceable structural changes and begins rebalancing the U.S.-China trade relationship. This unprecedented agreement accomplishes those very significant goals and would not have been possible without the President’s strong leadership,” said United States Trade Representative Robert Lighthizer.
Details of the finalized agreement, however, have not yet been released, leaving many speculating about the scale and details of the deal.
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