Details of US China Phase One Trade Deal
President Donald Trump and Chinese Vice Premier Liu He formally signed an interim, phase one trade deal that has eight chapters. The chapters are: intellectual property, technology transfer, food and agriculture trade, financial services, macroeconomic and currency policy, expanding trade, dispute resolution, and final provisions. As part of the pact, which will go into effect on February 14, 2020, China committed to buying an additional USD 77.7 billion in U.S.-manufactured goods (and USD 200 billion in total goods), including iron and steel products. For its part, the United States agreed to reduce tariffs on about USD 120 billion worth of Chinese consumer goods from 15 percent to 7.5 percent.
Still, the agreement leaves in place US tariffs on nearly $250 billion in Chinese goods, and it does not impact the United States’ Section 232 tariffs, nor does it include measures to address steel and aluminum overcapacity in China.
Regarding currency issues, the pact commits the two countries to following International Monetary Fund provisions avoiding currency manipulation and to achieving and maintaining a market-determined exchange rate regime.
In addition to agreeing to this provision, the US government last week dropped its formal designation of China as a currency manipulator. The decision marks a reversal from August 2019 when the Trump administration labeled China a currency manipulator for the first time in nearly 30 years.
Source : Strategic Research Institute