China Talking With US On Signing Phase One Trade Deal

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by Tyler Durden
Thursday, Dec 19, 2019 - 05:47 AM

Gao Feng, a spokesman at the Chinese commerce ministry, told reporters on Thursday that China and the US have been in touch about the signing of the phase one trade deal, reported Reuters.

The deal was announced last week after being declared by President Trump on Twitter in October, although exact details remain secretive.

"After the official signing of the deal, the content of the agreement will be made public," Gao said.

US trade representative Robert Lighthizer has said the US would lower tariffs on Chinese goods, and there will be a notable increase in Chinese purchases of farm products, like soybeans, pork, chicken, biofuels, and manufactured goods. 

Lighthizer has also said that China has agreed to spend at least $200 billion over the next several years on US goods. This would include $40 billion to $50 billion in annual farm product purchases, well above the baseline of $24 billion in 2017 before the trade war began in early 2018. 

Chinese officials have yet to confirm President Trump's version of the trade deal, nevertheless, refuse to comment on their farm purchase commitments. China recently said it would increase imports of US wheat, rice, corn, energy, pharmaceuticals, and financial services.

We noted Wednesday that Tom Kehoe, an adviser to the US Department of Agriculture and Lighthizer, said the Chinese aren't going to rush into agriculture purchases under the phase one deal.

"These are businesspeople," Kehoe said.

"They are going to have to be in a competitive situation. Otherwise, they are not going to buy it."

Kehoe said the Chinese had been more frequently sourcing farm products from Brazil and Argentina, where currencies have been weakened thanks to the global slowdown. The Chinese are going to source where farm goods are the most affordable, which at the moment is South America. 

We've also highlighted how Lighthizer's version of the deal could be impossible for the Chinese to fulfill. Former USDA Chief Economist and USTR agriculture negotiator, Joe Glauber, tweeted that $50 billion in agricultural purchases per year by China is impossible (a detailed explanation can be found on the thread below). 

Besides agriculture products, the deal includes Chinese legal protections for patents, trademarks, copyrights, including more criminal and civil procedures to fight online infringement and counterfeit goods.