Daily Management Review

US-China Deal: USTR Said $32 Billion In US Farm Goods To Be Bought By China In 2 Years


US-China Deal: USTR Said $32 Billion In US Farm Goods To Be Bought By China In 2 Years
The phase one of the trade agreement between the United States and China will entail a pledge of Beijing procuring $32 billion worth of additional US farm products during the next two years following the signing of the deal, said the US Trade Representative Robert Lighthizer while talking to reporters on Friday. He also added that the phase one of the trade deal will be signed in the first week of January.
Lighthizer added that under the new agreement, China would be making purchases of American farm products of roughly $16 billion more in each of the two years in addition to the baseline of $24 billion that was purchased in 2017. Lighthizer also said that China has also agreed ot try and increase the purchase by another $5 billion every year.
That would amount to total purchase of US agricultural produce worth between $40 billion and $50 billion which was the number that was announced by US President Donald Trump when he had initially made the announcement of the phase one trade deal on October 11.
Lighthizer said, on the overall, China has also agreed to bring in structural changes to its trading policies and for purchasing of $200 billion more in US goods and services during a period of two years which would be focused on four areas - manufacturing, energy, agriculture and services.
This agreement was not easy to arrive at because the negotiators form the two largest economies of the world worked hard over the past two months. The deal would also mark an end to the more than 17 month old trade war between the countries which saw both the countries imposing tit for tat tariffs on each other’s goods worth billions of dollars.
Specific targets for Chinese purchases of specific products are mentioned under the agreement, Lighthizer said, but added that details of those would not be disclosed to avoid market distortion.
While saying that China would be free to buy things when “it’s the perfect time in the market to buy things”, Lighthizer said that the trade deal was in line with the riles of the World Trade Organization.
Lighthizer also informed that the time period since October 11 when the deal was first announced by Trump, specifics on the meaning of words in the agreement was worked out between the negotiators of the two countries. He said that such discussions were carried out till Friday morning.
Lighthizer said that the negotiations were personally tough for him because he was suffering from laryngitis and hence was eager to “going home” for Christmas. Lighthizer was also one of the key US negotiators who helped forging the larger trade deal between the US, Mexico and Canada that replaced the Nafta deal.
The phase one trade deal will also include an assurance from the US about reducing the rate of some of the tariffs that are already in place on Chinese goods as well as suspension of the proposed 15 per cent tariff on Chinese products that was scheduled to come into force from December 15, Lighthizer said.