Status of China Trade Agreement

China has bilateral investment treaties with more than 100 countries and economies, including Austria, the Belgo-Luxembourg Economic Union, Canada, France, Germany, Italy, Japan, South Korea, Spain, Thailand and the United Kingdom. China`s bilateral investment treaties include expropriation, arbitration, most-favoured-nation treatment and repatriation of investment products. They are generally considered weaker than the investment treaties that the United States wants to negotiate. The agriculture chapter addresses structural barriers to trade and will support a dramatic expansion of U.S. food, agriculture and seafood exports, increase incomes from U.S. agriculture and fisheries, generate more rural economic activity, and promote job growth. Various non-tariff barriers to U.S. agricultural and seafood trade are eliminated, including meat, poultry, seafood, rice, dairy, infant formula, horticultural products, animal feed and food additives, pet food, and agricultural biotechnology products. The United States and China have reached a historic and enforceable agreement on a phase one trade agreement that requires structural reforms and other changes in China`s economic and trading system in the areas of intellectual property, technology transfer, agriculture, financial services, currency and currency. The Phase One agreement also includes China`s commitment to make significant additional purchases of U.S. goods and services in the coming years. It is important that the agreement introduces a robust dispute settlement system that ensures swift and effective implementation and enforcement. The United States has agreed to substantially amend its tariff measures under Article 301.

By November, China had only reached about 60 percent of the target, according to trade data compiled by Chad Bown, a senior fellow at the Peterson Institute for International Economics. China maintains 17 free trade agreements (FTAs) with its trade and investment partners and negotiates or implements eight other free trade agreements. China`s FHA partners are ASEAN, Singapore, Pakistan, New Zealand, Chile, Peru, Costa Rica, Iceland, Switzerland, Maldives, Mauritius, Georgia, Korea, Australia, Cambodia, Hong Kong and Macau. In addition, China and 14 other countries signed the Regional Comprehensive Economic Partnership in November 2020. China announced ratification of the agreement in early 2021. Although the agreement also sets targets for China`s purchases of certain services traded in the United States, this data is not reported monthly and is not covered here. The agreement also includes targets for 2021, which are not presented here. U.S. Deputy Trade Representative Sarah Bianchi told a trade conference on Tuesday that China had not met its procurement commitments under the deal and that negotiations between Washington and Beijing had been “very difficult.” Under the agreement, China has committed to purchase as much as $63.9 billion of covered goods from the United States by the end of 2020 compared to these 2017 baselines.

The definition of the baseline for 2017 using Chinese import statistics implies a purchase target of $173.1 billion for 2020 (red in panel a). Defining the baseline for 2017 using U.S. export statistics implies a target of $159.0 billion for 2020 (in blue in panel a). These gaps underscore the need for future bilateral trade agreements to go beyond narrowing the trade deficit in the short term and directly address Chinese subsidies that affect the competitiveness of U.S. producers. This impasse could continue because trade no longer dominates the bilateral political agenda, as was the case when phase one agreement was signed two years ago. Instead, the Biden administration is grappling with a number of more pressing Issues related to China, including tensions in the South China Sea, human rights, and pandemic control. U.S. officials said they would continue to urge China to show “serious intentions” to reach an agreement on their purchase obligations, but acknowledged that the framework of the agreement offered them little leverage to enforce purchase obligations. Zhao Lijian, a spokesman for China`s Foreign Ministry, said on Monday that the United States should work with China to advance economic and trade relations.

The future of the Phase One agreement and possible bilateral trade negotiations is uncertain. There is pressure on the USTR to ensure that China fully complies with the agreement and that both sides lower tariffs. Agriculture Secretary TOM VILSACK promised the American Farm Bureau convention Tuesday that the USTR “will continue to push China to the need for full implementation and implementation.” The first phase of the Economic and Trade Agreement focuses on China`s specific measures, policies and practices identified in the Article 301 investigation concerning technology transfer, intellectual property and innovation. The agreement begins to rebalance our trade relations and make meaningful and fully enforceable commitments to address structural issues. On February 14, 2020, the Economic and Trade Agreement between the United States of America and the People`s Republic of China: Phase One entered into force. China has agreed to increase the purchase of some U.S. goods and services by a total of $200 billion from 2017 levels from 2020 and 2021 levels. This PIIE chart tracks China`s monthly purchases of U.S.

products covered by the agreement, based on data from China Customs (Chinese imports) and the U.S. Census Bureau (U.S. exports). These purchases are then compared to the annual targets of the legal agreement, which are proportionate on a monthly basis on a seasonally adjusted basis beyond two basic scenarios (see methodology below). As stated in the legal agreement, one baseline scenario for 2017 allows the use of U.S. export statistics and the other allows the use of Chinese import statistics. The United States and China signed a historic and enforceable agreement on a Phase One trade agreement on January 15, 2020. The agreement requires structural reforms and other changes to China`s economic and trade regime. The continuation of the Phase One agreement, which aims at a long-term solution to the trade conflicts between the United States and China, must include enforceable mechanisms to limit or eliminate Chinese subsidies to key industrial sectors. .

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