United States and China reached the "Phase One" trade deal - Photo by White House Office

JAKARTA (TheInsiderStories) – The United States (US) and China will sign a phase one trade pact in early January, said both side on Friday (12/13). Part of the deal, Beijing agreed to buy US$200 billion in additional goods and services from America in the next two years.

According to US’ President Donald Trump, China has agreed to structural reforms in areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. As a part of this agreement, the United States has agreed to significantly modify its Section 301 tariffs.

“These phase one negotiations have begun important progress towards rebalancing our trade relationship with China. This phase one agreement will greatly benefit both the American economy and the global economy as a whole,” he said in an official statement.

Trump asserted, China has agreed to make substantial purchases of American manufacturing goods, agricultural products, energy products, and services. While, US’ trade representative (USTR), Robert Lighthizer, revealed that the pact is a very important step forward to balance US – China trade relations.

Beside rise imports in the manufacturing, energy, agriculture and services sectors, said USTR, China will to purchases more of US agricultural products with worth of $32 billion also in two years.

Beijing is targeting additional purchases of agricultural products of $5 billion per year, adds by the ministry. In 2017, before the war broke out, China imported $24 billion on US’ agricultural products.

While Washington will reduce import tariffs on a number of goods from China. This rate reduction will take effect 30 days after both sign the agreement. The US also postponed the adoption of new import tariffs on $160 billion of products, which will initially take effect today.

The agreement includes structural changes in China, including a commitment to end the pressure of transfer of US company technology and protection of intellectual property rights. Beijing will also address trade secrets, patents, trademark protection, piracy, and counterfeit goods that have been a concern.

Also included, currency transparency and China’ commitment not to devalue currencies. There are specific targets for purchasing specific products in the trade pact.

In addition, the US will not set additional tariffs on China and the potential changes to the agreement. Lighthizer said, the discussion about the next phase of the agreement will start at the right time.

He believed, the phase one trade agreements will almost double the US exports to China over the next two years, and are fully completed despite the need to revise the text of the agreement.

NAFTA

At the same week, Trump renegotiated the US – Mexico – Canada Agreement (NAFTA) and is replacing it with the US – Mexico – Canada Agreement (USMCA), the largest and most comprehensive trade agreement in history. Earlier this year, he also scored striking two new trade agreements with Japan on agricultural exports and digital trade and US – Korea Free Trade Agreement.

“I am pleased to transmit legislation and supporting documents to implement the United States – Mexico – Canada Agreement. The Agreement is an important part of my Administration’s efforts to rebalance trade in North America and to modernize our trade relationship with Mexico and Canada,” said the president.

The agreement, he continued, will create significant new opportunities for American workers, farmers, ranchers, and businesses by opening markets in Canada and Mexico and eliminating barriers to United States goods, services, and investment.

“Approving this Agreement is in our national interest.  I look forward to the Congress expeditiously approving the legislation,” he concluded.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com