Why this is important to Wisconsin businesses: Under the new trade deal, both sides agreed to purchase specific types of goods from one another over the next two years.
The U.S. and China signed the phase one trade deal on Jan. 15 after reaching a consensus on nine areas, including intellectual property rights protection, technology transfer, agricultural and energy products, financial services, exchange rates, trade balance, and bilateral evaluation and dispute settlement arrangement.
One of the highlights is intellectual property rights protection. The deal includes extending protections to subjects such as trade secrets and drugs and cracking down on piracy and counterfeiting on e-commerce platforms. Stricter IP protection will encourage more foreign high-tech enterprises to invest in China, creating an innovation-friendly atmosphere. The deal also demands transparency and equity in administration and supervision to keep confidential technical information from being undermined by the other side.
The agreement also deals with agricultural products. China agreed to purchase about $40 billion worth of U.S. agricultural products annually for two years. Under the agreement, China will purchase more U.S. agricultural products, including beef, pork, wheat, dairy, rice and aquatic products, from now through the end of 2021. The U.S. will allow Chinese agricultural products such as fragrant pears, citrus and jujube to enter the U.S. market. Although some domestic farmers expressed their concerns that this deal would affect their livelihood, the trade is still market-oriented. The final sale of U.S. farm products in China would depend on their safety and quality rather than on Beijing's commitment.
China has committed to import an additional $200 billion worth of U.S. goods in the next two years, which will help satisfy Chinese consumers' increasing demand for quality and affordable goods and services.
China has also agreed to further open its financial market. According to the deal, the two sides should provide each other with fair, effective and nondiscriminatory market access for banking, securities, insurance and electronic payments. However, China will not ease supervision.
On Feb. 6, 2020, China said tariffs on imports of certain U.S. products will be halved starting Feb. 14, a move made amid the novel coronavirus outbreak and following the recent decisions by the U.S. to reduce tariffs. The Customs Tariff Commission of the State Council said that for some U.S. goods with 10% tariffs that had been in place since Sept. 1, the rate was decreased to 5%, and for those with 5% percent tariffs, the rate was adjusted to 2.5%. The tariff reduction corresponds with the decision announced by the U.S. to cut tariffs on $120 billion worth of Chinese goods in half beginning Feb. 14. Experts estimated that $24 billion worth of U.S. products would face a lower additional tariff of 2.5% (down from 5%), while about $5 billion worth of U.S. products would face a lower additional tariff of 5% (down from 10%).