Trade, Agribusiness, and Food & Beverage Alert – Phase One Deal Signed, Yet Many Issues Remain

President Trump has signed an initial trade deal with China. In a ceremony with Chinese Vice Premier Liu He at the White House this week, President Trump celebrated the agreement which commits Beijing to halt intellectual property theft, cease manipulating their currency, cooperate in financial services, and purchases of over $200 billion in U.S. products over the next two years.

The deal will cut the 15 percent tariffs on $120 billion of Chinese imports in half, but leave 25 percent tariffs on an additional $250 billion of imports in place. When the parties agreed to the initial terms last year, the agreement prevented a planned tariff rate hike in October 2019 and a new round of tariffs in December 2019.

It is important to note: President Trump has specifically stated that the tariffs on $360 billion in products will remain in place as an enforcement mechanism. Though negotiations are expected to begin immediately, a ‘Phase Two’ agreement is not anticipated until after the U.S. elections, specifically no sooner than 10 months afterr this week’s signing. Success of the negotiations will hinge on China’s adherence to the Phase One Agreement.

A notice is expected in the Federal Register in the next few days regarding this Phase One agreement and implementation of the deal is anticipated roughly 30 days after this week’s signing.

FROM THE WHITE HOUSE:

Information on specific chapters of the Phase One agreement is provided below:

·         Intellectual Property: The Intellectual Property (IP) chapter addresses numerous longstanding concerns in the areas of trade secrets, pharmaceutical-related intellectual property, geographical indications, trademarks, and enforcement against pirated and counterfeit goods.

 





 

·         Technology Transfer: The Technology Transfer chapter sets out binding and enforceable obligations to address several of the unfair technology transfer practices of China that were identified in USTR’s Section 301 investigation. For the first time in any trade agreement, China has agreed to end its long-standing practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals, or receiving advantages from the government. China also commits to provide transparency, fairness, and due process in administrative proceedings and to have technology transfer and licensing take place on market terms. Separately, China further commits to refrain from directing or supporting outbound investments aimed at acquiring foreign technology pursuant to industrial plans that create distortion.

·         Agriculture: The Agriculture chapter addresses structural barriers to trade and will support a dramatic expansion of U.S. food, agriculture and seafood product exports, increasing American farm and fishery income, generating more rural economic activity, and promoting job growth. A multitude of non-tariff barriers to U.S. agriculture and seafood products are addressed, including for meat, poultry, seafood, rice, dairy, infant formula, horticultural products, animal feed and feed additives, pet food, and products of agriculture biotechnology.

 





 

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