Trump’s ‘Phase One’ Trade Deal With China Won’t Stop Trade Wars From Being the New Normal

President Donald Trump is expected to sign “phase one” of a U.S.-China trade deal Wednesday—marking a cooling of the trade war that has roiled markets and upset supply chains around the globe.

On paper, the deal will enhance Intellectual Property (IP) protection, tackle forced technology transfer and boost market access to key sectors of the Chinese economy, such as financial services and agriculture. An enforcement provision will allow the U.S. to unilaterally reimpose tariffs if the Americans think China has welched on its commitments.

In exchange, the Trump Administration will drop or reduce many of the tariffs imposed on Chinese goods imported to the United States.

However, trickier aspects of the U.S-China trade dispute—like subsidies for China’s state-owned enterprises—haven’t been included in “phase one.” And they may never never get tackled at all—so unyielding is each side’s position.

This makes it all too likely that the two countries will return to trade tensions and new tariffs, experts say.

“I expect this agreement will be fairly temporary,” says James H. Nolt, a senior fellow specializing on Asia at the World Policy Institute in New York. “They’ve kind of papered over some disagreements and made promises that can’t be kept.”

What’s in the “phase one” trade deal?

Like most trade deals, “phase one” has a little something for both sides to tout.

China is promising to buy $200 billion of American goods over the next two years: $50 billion worth of energy, $40 billion in agriculture, $35-40 billion in services and $75 billion of manufactured products, sources on both sides told the South China Morning Post.

Washington has already scrapped extra tariffs that were due to come into force on Dec. 15, and cut in half a 15% levy on $120 billion worth of Chinese goods. Still, 25% tariffs on $250 billion worth of …read more

Source:: Time – Business


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