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US, China to sign phase one trade agreement
Jan. 16, 2020
President Trump on Wednesday signed a partial trade deal with Chinese Vice Premier Liu He, China.
China will boost purchases of U.S. goods and services by $200 billion over two years in exchange for the rolling back of some tariffs under an initial trade deal signed by the world’s two largest economies, defusing an 18-month row that has hit global growth.
The centerpiece of the deal is a pledge by China to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years, above a baseline of $186 billion in purchases in 2017, the White House said.
Commitments include $54 billion in additional energy purchases, $78 billion in additional manufacturing purchases, $32 billion more in farm products, and $38 billion in services, according to deal documents released by the White House and China’s Finance Ministry.
Liu said Chinese companies would buy $40 billion in U.S. agricultural products annually over the next two years “based on market conditions” which may dictate timing of purchases in any given year.
Beijing had balked at committing to buy set amounts of U.S. farm goods earlier, and has inked new soybean contracts with Brazil since the trade war started.
Although the deal could be a boost to U.S. farmers, automakers and heavy equipment manufacturers, some analysts question China’s ability to divert imports from other trading partners to the United States.
The deal does not end retaliatory tariffs on American farm exports, makes farmers “increasingly reliant” on Chinese state-controlled purchases, and does not address “big structural changes,” Michelle Erickson-Jones, a wheat farmer and spokeswoman for Farmers for Free Trade, said in a statement.
Trump, who has been touting the Phase 1 deal as a pillar of his 2020 re-election campaign, said he would agree to remove the remaining tariffs once the two sides had negotiated a “Phase 2” agreement.
“We’ve already begun discussions on a Phase 2 deal,” Vice President Mike Pence said in a Fox Business Network interview.
For more information from USTR on the agreement, click here.
For more information from USTR on the agreement, click here.
Source: Reuters
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