U.S. China Trade Agreement Big Win: Phase One
After several months of negotiations, the United States and China finally reached an agreement on phase one of the new free trade agreement. In 2017 the Trump Administration started an investigation into the U.S. China trade agreement. The result identified the lack of fairness, transparency, and equity between the two countries with the United States getting the short end. Thus, prompting trade negotiations for the next several months.
The result is a fair and balanced trade agreement between the two countries that provides oversight, transparency, and an equal opportunity for success. Both countries made concessions in phase one and will continue to do so as the talks' progress.
China agreed to extensive structural changes within the trade agreement and its approach to trade operations. Phase one focuses on seven major structural changes for China. These include Intellectual Property; Technology; Agriculture; Financial Services; Currency; Expanding Trade; and Dispute Resolution. In the agriculture portion, China has committed to addressing a multitude of non-tariff barriers to U.S. agriculture exports including beef, pork, poultry, seafood, rice, infant formula, horticulture products, animal feed, feed additives, and pet food. For the next two years, China has agreed to purchase $40 billion to $50 billion in U.S. agriculture commodities as well as remove any agriculture-related trade barriers.
In response, the United States agreed to not impose the scheduled tariffs that were set to roll out on December 15, 2019. The U.S. also agreed to decrease the September 1, 2019, imposed a tariff rate from 15% to 7% on $112 billion of imports from China. The U.S. agreed to keep the additional tariffs at 25% on $250 billion of imports.
This is an incredible win for farmers and ranchers in the state of Arizona. China imports $1 billion directly from Arizona and of that $49 million is Arizona agricultural goods. A new free trade agreement will open new markets and opportunities with China and will only grow the state economy. The agreement is projected to be signed by the ambassadors of both countries in early January 2020.