With the stroke of a pen, the U.S. and China on Wednesday formalized a limited trade deal that signals a pause in the nearly two-year trade war between the world’s two largest economies and sets the stage for talks toward a broader agreement down the road.
The “Phase One” agreement, the product of months of negotiations between officials in Washington and Beijing, calls for China to boost its purchase of U.S. goods and services by $200 billion over the next two years, including $32 billion worth of agriculture products.
China also promised to undertake a series of changes to address U.S. concerns that it forces American companies to turn over their technology secrets as part of the cost of doing business there. The agreement also puts in place a system for resolving trade disputes between the two countries.
“Today we take a momentous step – one that has never been taken before with China – toward a future of fair and reciprocal trade,” President Donald Trump said during a White House signing ceremony with Chinese Vice Premier Liu He.
its companies to give them an unfair advantage over foreign businesses.
Analysts question how much the U.S. really got out of the initial agreement, other than a commitment from China to boost its purchase of American goods and services.
“This is largely a deal on Chinese terms,” said Robert Daly, director of the Wilson Center’s Kissinger Institute on China and the United States. “There is nothing we know about this deal that China wouldn’t like. And there is nothing we know about this deal that China probably wouldn’t have been willing to do some time ago.”
Daly described the deal as “purchases and pledges but no real change.”
Others said the Phase One deal is only an election-year placeholder designed to get the tough issues beyond Trump’s re-election bid.
“All the big trade issues between the U.S. and China remain unaddressed and punted into the future,” said David Rothkopf, a senior trade official during the Bill Clinton administration. “It is a Potemkin Deal, a sham.”
Regardless, Trump and a delegation of Chinese officials gathered in the White House’s ornate East Room on Wednesday for the formal signing ceremony.
Trump called the agreement “a transformative deal that will bring tremendous benefits to both countries.”
For decades, he said, American farmers, manufacturers and other workers have been hurt by unfair trade with China. “It was like just easy pickings,” he said.
Liu’s participation in the signing was significant, said Craig Allen, president of the U.S.-China Business Council, a nonprofit group representing American companies that do business in China.
“He is in charge of the economy (in China), and he is a close confidante of Xi Jinping, so his signature brings the imprimatur of the Chinese government,” Allen said. “I think it’s a very good thing.”
Liu was accompanied by several Chinese ministers, which suggests the Chinese government is interested in entering a new phase in its trade dealings with the U.S. and that the agreement will be enforced, Allen said.