President Donald Trump signed a partial trade agreement with China on Wednesday as the world's two largest economies are trying to stem an economic struggle.
The deal aims to dispel some of the long-standing American concerns about Chinese trade abuses. However, the agreement appears to leave questions of how Washington and Beijing will enforce its terms and prevent further tensions.
The deal is taking steps to eradicate various practices that upset the White House and bipartisan congressional members, including intellectual property theft and forced technology transfer in exchange for Chinese market access, the White House text said. In addition, a $ 200 billion increase in Chinese purchases of U.S. goods over a two-year period is reported – a priority for Trump.
The President said the United States and China "are writing past injustices and delivering a future of economic justice and security for American workers, peasants, and families." He added that the deal was "complete and fully enforceable".
The president signed the contract when parliament was ready to send indictments to the Senate and open a process to convict and remove Trump from office.
Here are some of the key points of the deal (read the full agreement here):
- It called on China to present an "action plan to strengthen the protection of intellectual property" within 30 days of the agreement's entry into force, the trade pact said. The proposal would include "measures China will take to meet its commitments" and "the date on which each measure takes effect".
- The agreement states that companies should be able to operate "without the violence or pressure of the other party to transfer their technology to the other party". Technology transfers "must be based on voluntary market conditions and reflect mutually agreed agreements," it says.
- The agreement states that China will increase US manufacturing, energy, and agricultural goods and services purchases by at least $ 200 billion within two years.
- It undertakes to prevent the sale of counterfeit goods.
- The agreement contains provisions to improve the access of the Chinese market to financial services companies.
- Before the signing, the Trump administration also revoked its decision to call China a currency manipulator.
US stocks rose Wednesday before the contract was signed. Trump signed the agreement after making important comments on July 4 about impeachment, golf, his 2016 win, stock market gains, the Federal Reserve's interest rate policy, and firecrackers.
President Donald Trump and Chinese Vice Premier Liu shook hands after signing the "first phase" of a US-China trade agreement on Wednesday, January 15, 2020, in the White House's east room in Washington.
Steve Helber | AP
The President thanked government officials, Republican lawmakers, Republican megadonor Sheldon Adelson, Fox Business Network host, Lou Dobbs, former Secretary of State Henry Kissinger and current and former businessmen Steve Schwarzman, Nelson Peltz and Hank Greenberg among dozens of people, which he recognized. Chinese officials stood silently next to the US delegation when Trump spoke for almost an hour before Chinese Vice Premier Liu He sent a message from Chinese President Xi Jinping.
The Chinese leader, according to a translation, called the trade agreement "good for China, for the United States and for the whole world". He wrote that "the next step is for both sides to seriously implement the agreement."
The Phase 1 agreement marks an important step in the effort to curb a more than 18-month trade war between Washington and Beijing. Trump has sought to stop China's abusive trading practices and keep one of its core promises.
Investors have been looking for signs that the US and China are trying to recall a crossfire that threatens to tarnish the global economy. The contract signed on Wednesday brings a welcome relief to companies who feared the levies – though the majority of them will stay in place.
"We leave the tariffs on, but I will agree to cut these tariffs if we make it through the second phase. In other words, we are negotiating the tariffs," Trump said.
US trade representative Robert Lighthizer told reporters on Wednesday that the deal has "real teeth" to tackle China's trading practices, adding that the US will be able to see if it is enforceable by spring. He said American tariffs on Chinese goods would help the administration enforce the agreement.
The US intends to launch talks on a second part of the agreement before the November presidential election, Lighthizer said. Last week Trump said he "may want to wait until after the election is over because I think we can do a little bit better business this way, maybe a much better deal."
As part of the agreement, the scrapping duties of the Trump administration that originally came into force last month were lifted. It was also agreed to cut tariffs on products to $ 120 billion to 7.5%.
However, the White House has announced plans to leave tariffs on another $ 250 billion in Chinese products for the time being. On Wednesday, Treasury Secretary Steven Mnuchin said in a second phase of the agreement that the US hopes to strike with yet another tariff cut.
"Just like this deal, there have been certain rollbacks, and there will be additional rollbacks in the second phase," he said, adding that China has a great incentive to return to the table and agree to the additional issues that remain to be resolved. "