MEMA Industry News Editor’s Note: MEMA is encouraged by the news that the President will be announcing a “Phase One” trade agreement with China tomorrow at the White House. We are pleased that China has pledged stronger enforcement of IP rights and increased imports of U.S. manufactured goods. Planned reduction in the fourth round of U.S. tariffs is also appreciated. We look forward to seeing more details.
MEMA has repeatedly called for an agreement between the U.S. and China that will allow U.S. companies to remain competitive in a global marketplace while protecting intellectual property (IP) rights. MEMA has opposed a wide range of tariffs that impact the motor vehicle parts industry, including the third round of Sec. 301 tariffs imposed on imports from China, which included thousands of motor vehicle parts and materials. MEMA has voiced concerns to the administration that these tariffs will have a disproportionate and significant impact on U.S. consumers who rely on affordable products for the repair and maintenance of their vehicles. Furthermore, the increased costs resulting from the tariffs will place a burden on small and medium-sized businesses.
To view MEMA’s previous comments on Sec. 301 actions, please visit MEMA’s Trade Resources page. Read MEMA’s most recent statement on the issue here. For questions on Sec. 301 tariffs, please contact Catherine Boland at firstname.lastname@example.org or by calling 202-312-9241.
WASHINGTON, Jan 14 (Reuters) - China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, plus over $50 billion more in energy supplies, according to a source briefed on a trade deal to be signed on Wednesday.
Aiding a sector that enjoys a rare trade surplus with China, Beijing would also boost purchases of U.S. services by about $35 billion over the same two-year period, the source told Reuters on Monday.
The Phase One agreement calls for Chinese purchases of U.S. agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year, the source said.
When combined with the $24 billion U.S. agricultural export baseline in 2017, the total gets close to the $40 billion annual goal touted by U.S. President Donald Trump.
The $32 billion agriculture increase over 2017 was confirmed by Myron Brilliant, the U.S. Chamber of Commerce's head of international affairs, who spoke to reporters on Monday in Beijing.
The numbers, expected to be announced on Wednesday at a White House signing ceremony between Trump and Chinese Vice Premier Liu He, represent a staggering increase over recent Chinese imports of U.S. manufactured goods.
Two other sources familiar with the Phase One trade deal agreed with the rough breakdown of the purchases, without providing specific numbers.
A spokesman for the U.S. Trade Representative's office could not immediately be reached for comment.
When the Phase One trade deal was struck on Dec. 13, U.S. officials said China had agreed to buy $200 billion in additional U.S. farm products, manufactured goods, energy and services over the next two years, compared to the baseline of 2017.
They said they would publish targets for the four broad areas, but would keep details of specific products classified to avoid market distortions.
Trump had mainly touted the increased farm exports, which would benefit a major political constituency that has been battered by Chinese retaliatory tariffs during his 18-month trade war with Beijing.
Company executives have been waiting eagerly for details of what other U.S. goods China would be buying more of, aside from farm products, after 18 months of tit-for-tat tariffs that have stalled U.S. business investment.
The $80 billion increase for manufactured goods includes significant purchases of autos, auto parts, aircraft, agricultural machinery, medical devices and semiconductors, said one of the sources, without giving the names of any specific suppliers.
The aircraft would likely be built by Boeing Co., the No. 1 U.S. exporter, whose new sales to China have ground to a halt over the past two years. That would be a welcome shot-in-the arm for the plane maker, which has seen shares and earnings plummet as its best-selling 737 MAX aircraft remains grounded due to two fatal crashes in 2018 and 2019.
The source providing the purchase figures expressed skepticism about manufactured goods pledges by Beijing since the U.S.-China trade deal does not address any of the non-tariff barriers that have kept these U.S. goods out of the Chinese market for decades, including procurement rules, product standards and subsidies to Chinese state-owned firms.
With Chinese car sales flagging and excess domestic assembly capacity on the rise, it's difficult to see the need for China to purchase significantly more U.S.-built cars. Among the most popular U.S.-built vehicles sold in China are BMW BMWG.DE and Mercedes-Benz DAIGn.DE sport-utility vehicles.
China also has major industrial policy goals to dominate the very manufacturing sectors in which it has pledged to pump up purchases of U.S. goods, further fueling skepticism.
Many economists and experts are dubious that the Phase One trade agreement will be implemented as written, despite what U.S. officials describe as an important enforcement clause in the deal.
That enforcement mechanism allows grievances to be aired through escalating consultations that would reach Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer.
If a U.S. claim of Chinese non-compliance cannot be resolved, Washington would have the right to reimpose tariffs on Chinese goods in proportion to the economic damage alleged. But nothing would preclude China from retaliating, returning the two sides to the current status quo, people familiar with the deal said.