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A Phase One Deal with China

Date: January 7, 2020

President Trump has said he will sign the phase one U.S.– China trade agreement on January 15 at the White House. Presumably Liu He, the Vice Premier, will be present to sign for China. According to U.S. officials, the deal will include commitments from China to buy at least $40 billion in agricultural imports the first year of the deal and a two-year commitment to purchase $200 billion of U.S. goods and services. Other provisions include improvements in IP laws and enforcement within China, an opening to greater foreign investment in the Chinese financial services sector, restrictions on currency manipulation and greater enforcement overall.

In return, the U.S. agreed not to impose tariffs on $160 billion in imports from China and cut September tariffs on $120 billion in imports from 15 to 7.5 percent. Twenty-five percent tariffs on $250 billion in imports imposed earlier would remain the same.

The office of the United States Trade Representative (USTR) published a list of tariff exclusions from List 1 that will be extended beyond Dec. 28. In addition, the office opened up a request for comment on extending tariff exclusions from List 1 granted in March 2019.

A phase two negotiation is expected to begin after the Jan. 15 signing ceremony and will attempt to tackle some of what the U.S. argues is the market distorting tech transfer, government subsidy, state owned enterprise systemic impediments to market reform in China.       

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