The United States and China signed a partial trade agreement on Wednesday aimed at putting the brakes on an 18-month trade war between the world’s two largest economies. With provisions covering purchase commitments, financial market access, intellectual property protection and enforcement, the phase one deal was made final by US President Donald Trump and China’s chief trade negotiator, Vice-Premier Liu He. The incremental deal is designed to be the first in a series of agreements intended to end a trade conflict that has seen tariffs slapped on hundreds of billions of dollars’ worth of trade – rupturing supply chains, shaking markets, increasing consumer costs and contributing to a global growth slowdown. “Today we take a momentous step, one that has never been taken before with China,” Trump said before signing the agreement with Liu in the White House’s East Room. The room was packed with business executives invited by the administration, as well as reporters, US lawmakers, Trump cabinet officials and members of the Chinese delegation. Trump said he would be travelling to Beijing in the near future “to reciprocate” and meet China’s president, Xi Jinping. After speaking briefly on the significance of the trade deal, Trump abandoned his teleprompter for a half-hour diversion, thanking various US officials, lawmakers and business leaders in the room, and airing well-worn grievances, including over his impending impeachment trial in the Senate. The signing, which occurred over an hour into the proceedings, represented the first time since the trade dispute began in July 2018 that both sides have formalised any commitments. The two countries were close to an agreement in May 2019, but talks collapsed at the last minute amid Washington’s accusations that Beijing had sought to backtrack on multiple major terms. After months of renegotiation and further escalating tariffs, the US government announced in December that it had reached consensus with Beijing on the details of a new pact , though Trump administration officials were still waiting to see a Chinese translation of the 86-page document as late as Friday, according to White House trade adviser Peter Navarro. Included in the deal is a commitment from Beijing to buy, over two years, at least US$200 billion of American goods and services more than it did in 2017. Those additional purchases will be made up of around US$77 billion in manufacturing, US$52 billion in energy, US$32 billion in agricultural goods and US$38 billion in services. The latter includes tourism, financial services and cloud services. Beijing had pledged to remove barriers to a long list of US exports, including beef, pork, poultry, seafood, dairy, rice, infant formula, animal feed and biotechnology, Trump said. In the agreement, the full text of which was released by the Office of the United States Trade Representative (USTR) after the signing, China also committed to speeding up its approval process for new agricultural biotech crops to an average of 24 months. The current processing time stands at five to seven years. Phase one deal gives Trump bragging rights but phase two may be a mirage The deal will result in the suspension of a planned December tariff on about US$162 billion in Chinese goods and halve an existing 15 per cent duty on imports worth around US$110 billion. China will not lift any of the retaliatory tariffs it has imposed on US$110 billion worth of American goods as part of the deal, USTR Robert Lighthizer said on Wednesday morning. Beijing had pledged to roll out new rules and regulations preventing Chinese companies from forcing US businesses to share intellectual property in exchange for market access, US Treasury Secretary Steven Mnuchin said on Wednesday morning ahead of the signing ceremony. In return for Beijing’s commitments, US negotiators agreed to reduce existing tariffs on some Chinese imports and cancel duties that were scheduled to take effect in December. Tariffs on some US$360 billion of goods entering the US will stay in place. Pointing to a further concession by the US, the Treasury Department announced on Monday that it no longer considered China a currency manipulator, a designation it had made in August amid unsuccessful talks in Shanghai and an escalation in tariffs. US-China trade deal is ‘modest but helpful’, say business leaders Monday’s move made for a considerably warmer welcome for Liu compared with his last visit to Washington. In October, just days before the vice-premier’s arrival for talks with his American counterparts in the US capital, the Trump administration rolled out a suite of sanctions targeting the Chinese government over alleged human rights abuses against Muslim ethnic minority groups in Xinjiang. “At times, there were setbacks in our trade talks,” Liu said of the countries’ discussions over the past two years. But “relentless” efforts from both sides had led to the successful forging of the agreement, which China vowed to “strictly honour” alongside the US, he said. As he had done at several previous meetings with Trump, Liu read aloud a letter to the US leader from Xi. Though largely laudatory in tone, the message appealed to the US government to treat Chinese companies “fairly” and support the “collaboration between enterprises, research institutes and [the] schools and colleges of the two countries”. Trump said that keeping the two “giant and powerful nations together in harmony” was important for the world, and said the deal would herald “an even greater world peace”. Moments later, having signed the agreement, the US leader left the East Room to the tune of Louis Armstrong’s What a Wonderful World . Global trade to improve in 2020 as phase one deal moves closer Beijing has framed the contract’s significance in more muted terms. Breaking two months of silence, Taoran Notes, a social media account affiliated with the Chinese government, said in a post on Monday that the trade war was “not over yet”, and that Wednesday’s signing represented “just the first round of a game”. Trade experts, for their part, have expressed doubt that the incremental agreement will pave the way for a consensus on the remaining thorny structural issues, such as China’s subsidies for state-owned enterprises. “The phase one deal is a step in the right direction, but it will do little to shake the widespread perception that trade uncertainty is the new norm,” said Jon Cowley, senior international trade lawyer at Baker McKenzie in Hong Kong. In a letter to Trump slamming the deal as “completely inadequate”, the Alliance for American Manufacturing, an industry association, said on Monday that “nearly all the major structural issues [had been] left unresolved”, among them China’s industrial subsidies and overcapacity. There’s more meat to phase one US-China trade deal than pork and soybeans Euan Rellie, founder of BDA Partners, a New York-based, Asia-focused investment bank, disparaged the president’s performance in the signing ceremony and the scarcity of breakthroughs in the pact as an example of Trump’s penchant for “showmanship over substance”. “His base is just lapping it up,” he said. “The reality is US farmers aren’t better off after the phase one compared to the beginning of the trade war.” However, Rellie expressed relief at the de-escalation in US-China tensions. “At least what we have now is Trump is unlikely to impose more tariffs,” he said. “I won’t call it a win. I will call it an uneasy temporary peace. It’s better than nothing.” Jeremie Waterman, the US Chamber of Commerce’s vice-president for Greater China, said the deal “puts a floor under a relationship that, quite frankly, has been struggling ”. Stock markets in the US, buoyed by the deal’s impending signing , rose more than 200 points on Wednesday before the ceremony. US exchanges stepped back in the afternoon, paring nearly half their gains, but were still up overall. The agreement will be connected to a strict enforcement mechanism under which any complaints will be adjudicated unilaterally within 90 days, administration officials have said. Complaints will be aired first at the working level; should those discussions fail, they would be escalated through the deputy level and, ultimately, to the secretary level. The mechanism lets the US enact punitive measures if complaints remain unresolved. Beijing had promised not to retaliate in such instances, Navarro said in an interview on NPR earlier this week. China treads warily on US trade deal text to keep other partners on side Trump said negotiations on a second phase deal would begin as soon as the phase one agreement “kicks in”, though he has previously said that he may decide to wait until after November’s presidential election to make the second agreement final. During remarks in the East Room, Trump said that completion of a phase two deal would mean complete removal of US tariffs on Chinese imports. Speaking with CNBC on Wednesday ahead of the signing ceremony, Mnuchin said the second phase agreement may be broken up into further incremental stages. “Phase two may be 2A, 2B, 2C,” he said. “We’ll see.” Additional reporting by Finbarr Bermingham, Mark Magnier and POLITICO’s Doug Palmer Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). 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