Daily Management Review

US & China Drawing Out Framework On Broad Trade Issues: Reports


US & China Drawing Out Framework On Broad Trade Issues: Reports
A much awaited trade agreement is said to be set to be reached between the United States and China according to reports.
According to multiple reports citing sources with knowledge of the matter, an outline of commitments in principle have been started to be etched by China and the US on the most contentious issues of the trade spat between the two countries. If this goes through, the seven month old trade war would potentially come to an end bringing in relief to the global markets.
Starting middle of last year, import tariffs on each others’ goods worth billions of dollars have been imposed by the two largest economies of the world. This acrimonious trade dispute between the countries has also threatened to slow down global trade and thereby the global economy. 
But reports also suggested that while the Washington round of trade negotiations between the two countries begin, the two sides are yet to agree on a number of key demands from China made by the US President Donald Trump's administration which primarily includes instituting structural changes in the Chinese economy.
However media reports state that despite such differences, both the sides are working on creation of a broad outline which could form the basis of a trade deal between the two parties. The current cut off date to arrive at an agreement is March 1, 2019 when the postponed US decision to increase tariffs from 10 per cent to 25 per cent for Chinese goods worth $200 billion is set to come into force unless the break is extended by Trump. A 90 day truce to the trade war beginning in December last year was agreed upon by Trump and his Chinese counterpart President Xi Jinping in Argentina on the sidelines of the G20 summit.

Sources told the media that the two sides are sketching out memorandums of understanding for six areas of structural importance – forced transfer of technology from American companies and cyber theft, securing of intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.
A number of the most contentious problems in trade between the US and China are covered by the MOUs and these documents could be the basis of bringing an end to those trade practices by China which were at the core of the reasons that Trump gad started imposing the import tariffs on China.
The sources also however cautioned that there could still be no positive outcome of the negotiations.
Despite apprehensions, US sources told the media that the significance of the MOUs lies in the fact that the US has been able to convince China to agree on and sign up on both the broader trade as well as some of the specific commitments on some of the core trade related issues.
Despite US allegations on China about unfair trade practices, Chinese authorities have always denied the charges.
The specific charges include forced sharing of technology and technological expertise of American companies with local Chinese companies in the capacity of joint venture partners and the handing over of intellectual property secrets. The US has also raised objections to the non-tariff barriers for foreign companies in China and has claimed that China attempts to keep out US companies from its market to provide undue advantage to oits domestic companies.