U.S., China deal aims to ease trade tensions
Fundamental differences still remain unresolved
WASHINGTON — The United States and China reached a trade deal Wednesday that eases tensions between the world’s two biggest economies, offers massive export opportunities for U.S. farms and factories, and promises to do more to protect American trade secrets.
Still, the Phase 1 agreement leaves unresolved Washington’s fundamental differences with Beijing, which is relying on massive government intervention in the economy to turn China into a technological power.
President Donald Trump is wanting to show progress on an issue that he has made a hallmark of his presidency and hopes to use in his reelection campaign this year.
“We mark more than just an agreement. We mark a sea change in international trade,” Trump declared during a rambling ceremony in which he made references to former FBI Director James Comey, the impeachment proceedings and a possible visit to Mount Rushmore on July Fourth for a fireworks display.
The Chinese delegation also praised the pact.
Some of the president’s Democratic critics were unimpressed.
“True to form, Trump is getting precious little in return for the significant pain and uncertainty he has imposed on our economy, farmers and workers,” said former Vice President Joe Biden, one of the Democrats hoping to replace Trump.
The agreement leaves in place tariffs on about $360 billion in Chinese imports, leverage the administration hopes will generate future concessions. U.S. trade officials said the agreement would end a long-standing practice of China pressuring foreign companies to transfer technology to Chinese
companies as a condition for obtaining market access. The 86-page agreement makes it easier to bring criminal cases in China against those accused of stealing trade secrets. It includes provisions designed to stop Chinese government officials from using administrative and regulatory procedures to ferret out foreign companies’ trade secrets and allowing that information to get into the hands of Chinese competitors.
China is required to increase its purchases of U.S. manufactured, energy and farm products and services by a combined $200 billion this year and next. The arrangement means that China is supposed to buy $40 billion in U.S. farm exports. That would be a windfall for Trump supporters in rural America but an ambitious goal considering that China has never bought more than $26 billion in U.S. agricultural products in a year.
So far this year, the U.S. deficit with China in the trade of goods has declined by 16%, or $62 billion, to $321 billion compared with a year earlier. The deficit will narrow further if Beijing lives up to its pledges to buy dramatically more American imports.
In the wake of the deal’s signing Wednesday, the Dow Jones Industrial Average closed above 29,000 points for the first time and the S&P 500 index hit its second record high in three days.