Opinion | US-China phase one trade deal still has room for negotiation despite flaws

Name: Unpacking the ‘phase one’ deal for the US-China trade war
Uploaded: 2021-12-01T17:00:24.000Z
Duration: 7 min 38 s
Description: Unpacking the ‘phase one’ deal for the US-China trade war

Questions remain around the trade deal, especially on enforcement, as China lags far behind its obligations to buy US goods and services

Putting aside the political rhetoric, opening the deal to readjustment and negotiations seems the most plausible option in the short term

Reading Time:3 minutes

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Vice-Premier Liu He (left) and then US president Donald Trump shake hands after signing phase one of the US-China trade agreement during a ceremony in the East Room of the White House in Washington on January 15, 2020. Photo: Reuters

Bashar H. Malkawi

Published: 1:00am, 2 Dec 2021Updated: 2:22am, 2 Dec 2021

Under the US-China phase one trade deal, Beijing agreed to make structural reforms, open its financial services and strengthen intellectual property. It also pledged to buy at least US$200 billion more in US goods and services for the two-year period through to December 31, 2021, above the 2017 baseline levels.

However, as we approach the end date, complaints have emerged that China is not meeting its obligations. It has reached only 62 per cent of the target, according to some reports.

This raises questions about compliance and enforcement. The United States and China agreed to an innovative approach as part of the agreement. Chapter 7 provides for the steps required to ensure effective implementation of the agreement.

The Trade Framework Group was created to discuss implementation of the agreement, led by the US trade representative and a designated Chinese vice-premier, with a Bilateral Evaluation and Dispute Resolution Office for each party.

As in a typical trade agreement, a complaining party can submit an appeal to the office of the other party on an issue connected to the trade deal. If it is not resolved, then the matter can go to the designated deputy US trade representative and Chinese vice-minister.

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Unpacking the ‘phase one’ deal for the US-China trade war

If the complaints still cannot be resolved, “the parties shall engage in expedited consultations”. But without a consensus, the complainant may “resort to taking action based on facts provided during the consultations, including by suspending an obligation under this agreement or by adopting a remedial measure in a proportionate way that it considers appropriate”.

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