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The Scorecard of the Phase One Trade Agreement

Published on February 14, 2020        Author: , and


The United States President and the Chinese Vice Prime Minister signed a deal dubbed as the “Phase One Trade Agreement” (“the Agreement”) on January 15, 2020. The Agreement withholds further escalation of the on-and-off trade war, which has dragged on for over 18 months between the US and China. The Agreement will likely lay a foundation for the handling of managing the fierce competition between the U.S. and China moving forward, at least for the next several years. But as we discuss below, key issues such as Chinese government subsidies, disagreements over Huawei’s selling of 5G telecommunications equipment and U.S. export controls on high-tech goods were left unaddressed.

The 96-page Agreement contains eight chapters, covering intellectual property protection, technology transfer, trade in food and agriculture products, financial services, macroeconomic policies and currency, expanding trade, dispute resolution, and final provisions. The Agreement primarily focuses on addressing certain Chinese behaviors that have long been concerns for the U.S. and corporate America and aims at lifting the standards of conduct closer to those followed (at least in theory) by the United States. One of the most noticeable features of this Agreement is the obligations and structural changes China agrees to undertake: The phrase “China shall” appears 97 times in the text whereas the phrase “[t]he United States shall” only appears five times, two of which relate to promises undertaken by both China and the U.S. In certain areas, e.g., pharmaceutical-related IP rights and patent rights more broadly, China’s undertakings exceed those the U.S. secured from partners in other commercial treaties such as the United States-Mexico-Canada Free Trade Agreement (“USMCA”).

Hence the success of this agreement largely depends upon its implementation and enforcement by China, which has already generated doubts in several areas. Moreover, concerns have been raised over the Agreement’s consistency with the World Trade Organization (“WTO”). Some questions also arise regarding what exactly has been agreed upon given the vagueness of some of the language, particularly regarding China’s commitments to import more U.S. goods and services. Read the rest of this entry…

Filed under: WTO
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