Trade Agreement Phase 2

The first phase of these negotiations provides much of the White House agenda. China has promised to buy about $200 billion more from the United States over the next two years. Beijing has promised to open Up China`s financial markets to U.S. banks, investments and insurance. Chinese officials also promised to stop insisting that U.S. companies operating in China must have a Chinese partner to which the U.S. company must transfer its technology. The agreement remains silent on the issue of cyber theft, but it contains provisions for Chinese companies to warn Americans if products that could violate the U.S. company`s patent are introduced. In addition, it allows affected U.S. companies to move closer to Beijing through the U.S. Trade Representative.

In the past, U.S. companies have had to go to the Beijing government themselves, where they risked retaliatory damage to complain. Trump`s failure to deliver on this key issue is unlikely to concern him in November. He can easily blame the coronavirus for breaking his plans to liberalize trade between the United States and China. If he wins a second term, his stance toward Beijing will only harden, but after COVID-19 has shaken the U.S. economy this year, voters may indeed want a firm president against a country that has cut off its economic prospects. If U.S. President Donald Trump plans to visit China, there must of course be something to discuss. This is likely to be more related to the signing of certain long-term trade agreements (aeronautics and space could be a large part of Phase 1) than to a radical change in policy. As Nick Sargen of The Hill says, phase two has always been the most difficult phase of the deal. This is because there were disputes over certain features of the agreement, including the volume of Chinese purchases of U.S. agricultural products.

Before Trump halted trade talks Friday, U.S. Trade Representative Robert Lighthizer hinted that the U.S. could re-impose tariffs on China if enforcement mechanisms that require both sides to settle their differences during the talks fail. In the near future, the United States could review trade relations with other Asian countries in the run-up to the presidential elections, Rogers said.

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