Our key takeaways

The U.S.-China phase one trade agreement is very much like an extension of previous agreements the U.S. has made with China. However, its centerpiece stands out: China’s pledge to purchase a minimum of US$200 billion worth of additional U.S. goods and services over the next two years. Furthermore, the dispute resolution clause allowing the consulting party to take measures against its counterpart, e.g. raising tariffs, if the parties cannot resolve an issue on the agreement after consultation, is noteworthy.

From a U.S. perspective, there was an interest to at least agree to a modest deal rather than having no deal at all as both countries, not only China, suffered under the tariff war. Moreover, from a US perspective, the deal was relevant for the upcoming elections. For China, having purchase agreements was a more comfortable approach – better than being obliged to undergo structural reforms.

China is surprisingly well underway in developing and implementing agreed measures on Intellectual property Rights (IPR), agriculture and financial services according to the deal. The next big milestone is the delivery of an IPR action plan by mid-March. Even though China reassured its intention to take necessary steps for the purchase of agricultural goods amid the coronavirus outbreak, it is highly uncertain if the agreed targets can be reached.

Various countries have expressed concerns over their exports to China due to the agreed purchase agreements between the U.S. and China that may violate China’s WTO obligations. It is assumed that possible actions within the WTO are unlikely to cause any problems to the U.S.-China trade deal. There is a risk that other countries may follow the example of the U.S. and China.

Wendy Cutler is Vice President of the Asia Society Policy Institute (ASPI) and Managing Director of the Washington D.C. Office. In these roles, she focuses on building ASPI’s presence in Washington — strengthening its outreach as a think/do tank — and on leading initiatives that address challenges related to trade and investment, as well as women’s empowerment in Asia. She joined ASPI following an illustrious career of nearly three decades as a diplomat and negotiator in the Office of the U.S. Trade Representative (USTR). Most recently she served as Acting Deputy U.S. Trade Representative, working on a range of U.S. trade negotiations and initiatives in the Asia-Pacific region. In that capacity she was responsible for the Trans-Pacific Partnership (TPP) agreement, including the bilateral negotiations with Japan. She also was the chief negotiator to the U.S.-Korea (Korus) Free Trade Agreement. Cutler received her master’s degree from Georgetown University’s School of Foreign Service and her bachelor’s degree from the George Washington University.

Shirley Yu is a political economist, a former national TV broadcaster and a seasoned senior executive for multinational listed companies and a board member. She has a strong voice on China’s political economy, digital economy and geopolitics, most recently on geopolitics behind China’s technological rise. Shirley currently works as a senior visiting fellow with the Institute of Global Affairs of the London School of Economics (LSE), and an Asia fellow with the Ash Center of Harvard Kennedy School. She has a Ph.D. in political economy from China’s Peking University, and a master’s degree in Government from Harvard University. She has published three books in Chinese, including On China, by Ambassadors, and the Rise of the renminbi (RMB) and the Fall of the Yen. She also serves as a mentor for Cherie Blair’s Foundation for International Women.