The Sino-U.S. Phase One Trade Deal Is an Imperfect Painkiller. What's Next?

Jude Blanchette, Qiu Mingda
Content Type
Journal Article
The Ambassador's Review
Publication Date
Fall 2019
Council of American Ambassadors
After two days of intense talks with United States Trade Representative (USTR) Robert Lighthizer, Chinese Vice Premier Liu He and his delegation crossed the street to the White House on the afternoon of October 11th to meet with President Donald Trump for the first time since the negotiations collapsed in May. The visit marked the 13th round of the bilateral trade talks and concluded with an announcement from the Oval Office of a “phase one” agreement. According to President Trump, this included China’s commitment to purchase $40-50 billion of U.S. agricultural products and a pledge to strengthen its intellectual property protection regime domestically. Moreover, Beijing would make still-unknown adjustments to how it manages its currency, the renminbi. For its part, the United States delayed a scheduled tariff hike on $250 billion of Chinese goods from 25% to 30% on October 15th. In addition, the Treasury Department would potentially review its previous decision to designate China a currency manipulator. All in all, it seemed to mark a turning point in the bilateral tensions. According to a tweet from President Trump two days later, this was the beginning of a larger deal that would be spread over three phases and that would benefit American farmers and potentially put an end to the trade hostilities between the two nations. In short, he tweeted, “the relationship with China is very good.” Though he acknowledged that the actual terms of any deal are still being worked out, the President repeatedly expressed optimism that he and Chinese leader Xi Jinping could ink a deal by mid-November during their meeting at the upcoming Asia-Pacific Economic Cooperation (APEC) meeting in Santiago, Chile. Unfortunately, such confidence is misplaced. The decided lack of details on the scope, timing and mechanics of the phase one announcement is an indication of just how preliminary the agreement is. Second, Beijing remains unwilling to make more substantive concessions on core structural issues, ranging from its preferential treatment of its state-owned enterprises to a credible commitment that it will protect the intellectual property of foreign companies. Finally, even if phase one comes to fruition, this won’t do much to reduce the uncertainty that likely will define the U.S.-China relationship for years to come, as both countries begin to openly acknowledge that they are entering a period of prolonged strategic rivalry.
Diplomacy, International Cooperation, International Trade and Finance, Trade Policy
Political Geography
China, Asia, North America, United States of America