While the so called phase one of the trade agreement between the United States and China, that is slated to be signed later this week, will be able to only stop the bleeding but will not be able to bring an end to the acrimonious trade war between the two largest economies of the world. This was said a senior U.S. Chamber of Commerce official on Monday who also warned that there are still big hurdles to overcome by the two parties to bring an end to the trade war that has seen both the countries imposing import tariffs on thousands of goods of each other worth billions of dollars.
The phase one of the trade agreement is “clearly a sigh of relief from both sides”, said Myron Brilliant, the chamber’s Executive Vice President, told a media briefings in the Chinese capital. It is expected that the phase one of the trade deal would be signed in Washington on Wednesday. He also said that the depth and breadth of the phase one trade deal is more than the market, investors, businesses and experts were initially expecting to be achieved.
“Implementation of Phase 1 will be important to building trust and certainty, building off the success of the negotiation,” said Brilliant,. He confirmed that while he had some knowledge of the contents of the phase one trade deal, he had himself not seen the deal.
He said that the phase one trade agreement “stops the bleeding”, but “at the same time it’s important that the two sides demonstrate a commitment to moving forward on the Phase 2 negotiations”.
Because of the fact that most of the core structural issues that are at the heart of the trade war between the US and China are still largely unresolved, there are therefore “still significant challenges” being faced by both the countries, Brilliant said. There was still much unfinished work to do on tariffs still in place.
Investors and business executives believed that the phase one trade agreement which had been agreed by both the parties on December 13 was a way to tone down the animosity between the two countries that has been ongoing via the 18-month old bilateral trade dispute. This trade war has not only affected the two countries but has also upended global financial markets, disrupted global supply chains and threatened to push global economy into a recession.
Despite scaling and rolling back some of the tariffs imposed by it on Chinese goods, the US has left in place tariffs on Chinese imports worth $370 billion which is expected to be taken care of in the phase two of the trade agreement. Additionally, there are some sticky and contentious issues that both the sides will have to resolve in the second phase which includes addressing the issue of subsidies by the Chinese government to state owned companies and some industrial policies that allegedly create an uneven playing field for foreign companies.
There are also questions being raised about whether the phase one deal can be adhered to by the parties, partly because a massive increase in procurement of agricultural products from America has been promised by China in the phase one of the deal.
(Adapted from Reuters.com)