What does the US-China Phase 1 agreement include?
With the signs that the talks on the first phase of the agreement signed between the USA and China will resume after the interruptions, the markets have moved. What does the US-China Phase 1 agreement include?
Under the first phase of the trade agreement, China agrees to buy at least $ 200 billion worth of American goods and services under the deal within the next two years.
According to US data, China had received $ 130 billion worth of goods and $ 56 billion worth of services from the United States before the trade war started in 2017.
China will buy an additional $ 77 billion of manufactured products
China also agreed to purchase $ 77 billion worth of manufacturing products within two years, in addition to levels in 2017. This corresponds to an additional $ 32.9 billion for 2020 and $ 44.8 billion for 2021.
In addition to 2017 levels, China has also agreed to purchase additional service products worth $ 37.6 billion from the US within two years. Thus, it will purchase an additional $ 12.8 billion in 2020 and an additional $ 25.1 in service products in 2021.
In addition, as a “recommendation” item, it is suggested that the agricultural products that China will import from the USA will increase by 32 billion dollars within two years.
The USA will cut customs duties by 7.5%
As regards customs duties, the US will cut its tariffs imposed in September 2019 by 7.5% for a list of Chinese products of $ 120 billion.
The 25% customs duty imposed by the US on a Chinese product worth $ 250 billion will not change at the first stage. According to the US Treasury Secretary Steven Mnuchin, this phase 2 process can be renegotiated.
The agreement also provides for a stronger Chinese patent law to combat piracy and counterfeit products by increasing brands and usage rights.
The part of the agreement on exchange rate balance stipulates that China will not devalue the competitive currency and keep the rate at low levels to gain a trade advantage. With this agreement, China also agrees to publish relevant data regularly.
According to statements from US officials, the agreement also includes easier access for US companies to China’s financial services market. This clause in the agreement aims to bring a solution to the investment barriers and foreign asset restrictions that the US has been complaining about for a long time.