Us China Agreement Phase 1
From the beginning, an additional $200 billion in sales to China were a worrying goal. Nearly 30% of U.S. merchandise exports to China are not even covered by the Phase One agreement. And for those who covered the agreement, a review of 15 product groups shows that their sales to China have been influenced by various factors, including plane crashes, epidemics of outbreaks, export controls, World Trade Organization (WTO) legal decisions, the lingering effects of trade war tariffs and the pandemic. Assessing progress in achieving the Phase 1 targets for merchandise trade requires information from both U.S. export and import statistics, as Chapter 6 of the agreement, Article 6.2.6, states that “official Chinese trade data and official U.S. trade data are used to determine whether this chapter has been implemented.” One consequence is that there are two sets of monthly data to follow (Chinese imports and U.S. exports). A second is that there are two different annual targets, and therefore monthly, given that the basic level of Chinese imports in 2017 deviates from the initial level of U.S.
exports for 2017. Finally, the products covered by the purchase commitments are listed in the appendix of the Schedule 6.1 agreement at levels of 4, 6, 8 or 10 digits; These will then be ranked in U.S. or Chinese trade statistics for 2017 and 2020. As of our October 26, 2020 report, we have included the U.S. export product 8800 (in addition to 8802 aircraft) in “secure manufacturing” and total, and we have relocated it out of the “uncovered” category. Left: U.S. President Donald Trump holds Chinese Vice Premier Liu He after signing the “phase one” of the U.S.-China trade agreement in the East Room of the White House in Washington, U.S., January 15, 2020. Photo: Kevin Lamarque/Reuters The Chinese delegation also welcomed the pact. In a letter to Trump, Chinese President Xi Jinping said the first phase agreement was “good for China, for the United States and for the world.” He said he also showed that the two countries were capable of “acting on the basis of equality and mutual respect.” The letter was read by Beijing`s chief negotiator, Vice Premier Liu He. Since Washington and Beijing signed the so-called phase one agreement earlier this year, just as the pandemic has shaken global (and especially Chinese) economic activity, the agreement has been in trouble.
Its very ambitious targets – a huge increase in exports of U.S. energy, agricultural products, production and other goods to the United States this year and next – have always been difficult to achieve. The only thing that has been complicated by the pandemic, for example, is a strong pressure on Chinese demand for U.S. oil and natural gas, whose sales are far from close to the original targets. Despite a recent Report by the Trump administration, which suggests another thing, U.S. agricultural exports to China have yet to meet commitments made in the first phase.7 Although better than manufacturing, it was not until September that agricultural exports returned to their pre-market level (Figure 3). In September, they were only 66% of their seasonally adjusted targets. In other words, China will have to import 62% of the total agricultural commitment in October, November and December if it is to meet the 2020 target. Not only does not rely on purchasing objectives address China`s problematic policy, which harms Americans, but it also helps to consolidate government planning, contrary to market results. In particular, because China continues to impose discriminatory retaliatory duties on U.S.
exporters, only its state-owned enterprises, not the Chinese private sector, will increase many purchases to meet their commitments, the opposite of what U.S. politicians say they want.