US, China ink deal, seen as a ceasefire, not truce

US to nix tariffs on Chinese goods; Beijing to step up American imports

WASHINGTON: The world’s two dominant economic powers, the United States and China, signed Phase 1 of a trade deal on Wednesday, putting on pause a two-yearlong trade war that has shaken up the global economy.

The agreement, signed by President Donald Trump and Chinese Vice-premier Liu He, includes a “major commitment” by China to make “significant reforms” in a wide range of critical areas and to make substantial additional purchases of American goods and services in the coming years, the White House said in a note backgrounding the agreement.

The “phase one” agreement — which includes pledges from China to beef up purchases of American crops and other exports, according to news agency AFP — also comes just as Trump faces an impeachment trial in the US Senate, giving him a victory to trumpet at least in the short term.

But the most difficult issues remain to be dealt with in “phase two” negotiations, including massive subsidies for state industry and forced technology transfer.

“Today we take a momentous step one that has never been taken before with China as we sign phase one of the trade deal,” Trump said, announcing the conclusion of the agreement at a White House event attended by lawmakers, officials, and supporters and the former secretary of state Henry Kissinger, who had spearheaded President Richard Nixon’s outreach and the 1972 visit to China that led to the thaw in relations between the two countries.

Vice-premier Liu read out a message from President Xi Jinping in which the latter stressed the need for equality and mutual respect in tackling issues and implement the deal in “real earnestness”. Xi also said he hoped that US treats Chinese companies fairly.

China will buy $200 billion worth of US farm produce and other goods and services over two years, over a baseline of $186 billion in purchases in 2017. The deal includes $50 billion in additional orders for US agricultural products, Trump said, adding he was confident that US farmers would be able to meet the greater demand. He also said China would buy $40 billion to $50 billion in additional US services, $75 billion more in manufacturing goods, and $50 billion more worth of energy supplies.

It will also liberalise its financial services sector to grant access to American companies, end forced transfer of technology through acquisitions, end currency manipulation, work towards balancing trade between the two countries and also punish companies found to have stolen proprietary intellectual property and patented technology.

In return, the United States will halve tariffs on $120 billion of goods from China, and shelve for now further levies. But import duties on $360 billion of Chinese goods will remain in force, to make sure, according to news reports citing unidentified US officials, China delivered on its commitments.

Treasury secretary Steven Mnuchin said Trump’s negotiating stance led to a “fully enforceable deal” that could bring additional tariffs.