Beijing-Washington | China and the US have reached a phase one trade deal, which will halt tariffs that were set to take effect this weekend and pave the way for a winding back of some existing duties on Chinese goods.
While China’s leaders hailed the agreement as a breakthrough in their 18-month long trade war with Donald Trump, they refused to provide any specific details.
In a late night press conference, Chinese officials said that Washington agreed to cancel a 15 per cent tariff on US$160 billion ($230 billion) of goods that was scheduled to take effect on Saturday.
Chinese officials said Washington had also agreed to roll back some existing tariffs in a staged process and that China in turn would buy more American agricultural products.
Still the officials refused to answer questions about the specifics of the deal or put a figure on the commitment to buy more farm goods.
There is also concern that while there appears to be agreement over the text of a deal, it still needs to be formally approved and is open to interpretation. They would not say when it would be signed.
China hailed the deal as an opportunity to deepen its economic reform program in areas such as intellectual property without being specific.
In Washington, US Trade Representative Robert Lighthizer told reporters that the deal would be signed in early January.
Mr Lighthizer’s office said China had consented to “structural reforms” that would improve intellectual property protection and curb the practice of forcing foreign companies to hand over technology as the price of admission to the Chinese market.
US stocks ended very modestly higher in New York on Friday.
Still, there were a lack of specifics and business groups said more needed to be done to combat Beijing’s aggressive trade practices.
“This deal should go a long way in reversing the downward spiral in bilateral trade relations and increasing certainty for US businesses,” said Wendy Cutler, a former US trade negotiator who is now vice president at the Asia Society Policy Institute.
Still, Ms Cutler said, “it’s unclear on how far the phase one agreement goes in addressing the key structural issues that brought the US to the negotiating table 17 months ago”.
Mary Lovely, a trade economist at the Peterson Institute for International Economics, said it is unlikely that the deal delivers enough benefits for the US to outweigh the costs of the trade fight so far.
US farmers lost billions of dollars in income, companies paid billions in tariffs and in many cases shifted their supply chains, and consumers saw some prices increase.
“Many of us are highly sceptical that the agreement will be enough to outweigh these other costs,” Lovely said. “The US didn’t move the needle very much.”
Still, the agreement should help smooth some of the uncertainty surrounding global trade, Lovely said.
“We have a cease-fire, we have some roll back, that is very significant,” she said. “We were kind of on a brink here, and we saw the negotiators pull us back.”
As for farm products, Mr Lighthizer said China agreed to buy $US32 billion more of them over two years as part of the phase one trade pact.
Specifically, Beijing agreed to buy $US16 billion more in American agricultural products in the first year, up from the 2017 baseline of $US24 billion, Lighthizer said.
Trump’s announcement of the trade deal came minutes after the House Judiciary Committee approved impeachment charges of abuse of power and obstruction of Congress.
The deal leaves unresolved some of the thorniest issues. Trump said in a tweet that work on a follow-up accord would begin “immediately, rather than waiting until after the 2020 election. This is an amazing deal for all. Thank you!”
Friday’s announcement was a long time coming. Trump first announced a Phase 1 deal on October 11, but negotiations on a final version continued for two months.
With AP, Reuters