On January 15, 2020 President Trump and Vice Premier Liu He signed the preliminary “Phase One” agreement, culminating more than a year of negotiations, tariff increases and dead ends. The agreement sees Chinese purchases of US Agriculture in exchange for a reduction on the list 4b tariffs from 15% to 7.5%. Also covered are banking regulations and anti-counterfeiting measures that now have enforceable penalties for offenders.
China has agreed to buy $200 billion in US goods and services over the next two years, including $12.5 billion in agriculture in 2020 and $19.5 billion in agriculture in 2021. The agriculture products pork, soy beans, cotton, and wheat are the most in demand on this agreement with pork being even more crucial as China faces a shortage this year since African Swine Flu crippled the population of hogs in China.
The negotiations are far from over, even though there has been a signing. The first three lists of tariffs haven’t been reduced or cancelled and goods are still being charged upwards of 25% in some cases. There are issues with intellectual property rights and banking that haven’t been dealt with and will need to be addressed at a later date. China is one of the biggest offenders of intellectual property theft and their banking regulations set up an often unfair playing field in favor of national companies and not foreign entities.
We expect to hear more after February 15th, considering that’s a week past the Chinese New Year and the day the list 4b tariffs will be halved. We’ll keep an eye on this situation to bring the most current news to our readership.