To date, the U.S. merchandise trade deficit over the previous year has decreased by 16% from the previous year to $321 billion. The deficit will continue to shrink if Beijing meets its commitments to buy significantly more U.S. imports. A4: In size terms, which is only six pages long, the “Bilateral Assessment and Dispute Resolution” chapter is the least important element of the agreement. But this does not live up to the importance of this component, which is relatively clear and simple. There is a multi-step process. The U.S. trade representative and the Deputy Prime Minister-designate, and among them, the U.S. Deputy Trade Representative and a Deputy Secretary-designate will lead the meeting.
For day-to-day business, both parties will create a dispute assessment and resolution office. If one party feels that the other party is not meeting its commitments, it can make a “call” to the other. If permanent functions are not resolved, the conflict escalates to MPs and then to political leaders. In the absence of a solution, “the complainant may take evidence-based action made available during the consultations, including suspending an obligation from this agreement or adopting an appropriate remedy to avoid an escalation of the situation and maintain normal bilateral trade relations.” critical, if one party takes such a remedy, the agreement states that the other party is prohibited from imposing penalties; Rather, the only recourse is to withdraw from the contract, which each party can do with a 60-day written communication. Chinese buying bonds are the first shot in the arm. The agreement calls for China to purchase at least $40 billion in agricultural and related products per year for the next two years. While this obligation to purchase imprisons China as a destination for American plants and employs American farmers, it is not clear that the United States can deliver this amount of agricultural goods to China. At least the U.S. may have to redirect exports to other markets to China. It is also unclear whether China would be more dependent than ever on U.S. agricultural imports or whether American farmers are willing to put all their eggs in the Chinese basket. U.S.
agricultural exports to China peaked in 2013, when U.S. farmers sent about $29 billion in goods to China, $11 billion below the Phase 1 commitment. Finally, purchase commitments are more consistent with a state-led business model than a market-based model, which China intends to adopt by the United States. On January 15, President Donald Trump and Chinese Vice Premier Liu He held a much-anticipated ceremony in the East Room of the White House to sign a Phase 1 trade agreement between the United States and China. Entitled “Economic and Trade Agreement Between the United States of America and the People`s Republic of China,” the document includes 96 pages of eight chapters on intellectual property, technology transfer, food and agricultural trade, financial services, macroeconomic policy and currency, trade expansion and dispute resolution. As part of the agreement, China agreed to increase its purchases of U.S. goods and services by at least $200 billion over the next two years from imports in 2017. The United States, on the other hand, will reduce some tariffs, but maintain them on $360 billion of Chinese imports, the bulk of bilateral trade. A conclusion drawn from the data is obvious. The Americans suffered when China`s retaliation devastated U.S. exports. Trump`s rate hikes have increased prices for U.S.
consumers and costs for U.S. businesses. His politically motivated buying commitments may have caused more problems than they solved. After the election, the United States needs a new approach to solving its trade problems with China.