Details of the basic approach to mapping the 2020 annual targets on trade data are available in Bown (2020). Additional assumptions made here include estimating for 15 distinct product categories, as the agreement contains only aggregate targets for the four manufacturing, agriculture, energy and services sectors. The approach is to allocate targets at the product level based on the share of that product in overall U.S. exports to China in 2017 of the goods covered by the purchase obligations. See also the table below. “Far beyond this agreement, it will lead to an even stronger world peace,” he added. While signatories celebrate it as “historic” – hyperbolic for its modest goals – what the deal hopes to be is opposable. Its provisions implement, inter alia, tariff reductions, the expansion of commercial purchases and renewed commitments on intellectual property rights (IP), technology transfer and monetary practices. A first pact, which will ease tensions during an election year, follows months of escalating tariffs and a trade war that seemed to never stop. Relying solely on purchasing targets, not only China`s problematic policy, which harms Americans, also helps to consolidate state planning in relation to market outcomes. In particular, because China continues to impose discriminatory retaliatory duties on U.S. exporters, only its state-owned enterprises, not the Chinese private sector, will increase many of the purchases to fulfill obligations – the opposite of what U.S. politicians say they want.
The goals of the deal also send signals to U.S. economic allies that the U.S. is primarily interested in diverting imports by China from its suppliers instead of addressing China`s problematic policies and undermining their confidence in U.S. policy. One conclusion of the data is obvious. Americans suffered when China`s retaliation devastated U.S. exports. Trump`s tariff hike has raised prices for U.S.
consumers and costs for U.S. businesses. Its politically motivated purchase commitments may have created more problems than they have been solved. After the election, the US will need a new approach to solving its trade problems with China. The United States and China have been engaged in a customs war since 2018 that has resulted in the imposition of additional import taxes on traded goods worth more than $450 billion (£350 billion). The ongoing dispute has disrupted trade flows, dampened global economic growth and destabilized investors. Today, we are taking an important step that has never been taken with China towards a future of fair and reciprocal trade, as we sign the first phase of the historic U.S.-China trade agreement. Together, we are correcting the injustice of the past and ensuring a future of economic justice and security for American workers, farmers, and families. And it will be a great deal for both countries.
That`s well over $200 billion and it`s going to grow every year. It also unites countries. The agreement marks an important turning point in U.S. trade policy and the types of free trade agreements that the U.S. has generally supported. . . .