US Launches Investigation into China's Adherence to Phase One Trade Deal

Strategic Insights -

The United States on Friday initiated an investigation into China's adherence to the Phase One trade deal, which was signed in 2020. The move is a response to China's failure to meet the agreed-upon targets for purchasing US products and services. The investigation was prompted by China's apparent failure to comply with the January 15, 2020, agreement, and could lead to further action depending on the findings.

Key Takeaways:

  • The Phase One trade deal, signed in 2020, requires China to increase purchases of US products and services by hundreds of billions of dollars over 2020 and 2021.
  • China has failed to meet the targets due to the Covid-19 pandemic, causing concern among US trade officials.
  • The investigation, led by the US Trade Representative's office, could heighten tensions between the US and China, which have already experienced a tumultuous trade relationship.
  • China had promised to boost purchases of US agricultural goods, but renewed tensions led Beijing to raise tariffs on US agricultural products, including soybeans.
  • The USTR's office emphasized the US commitment to protecting domestic interests and called out China's lack of compliance with the Phase One Agreement.
  • Washington may seek public comments as part of the investigation, which could shape the response to China's trade practices.

Statistics:

  • China had agreed to increase purchases of US products and services by hundreds of billions of dollars over 2020 and 2021.
  • The US Trade Representative's office cited China's "apparent failure to comply with the January 15, 2020" agreement.
  • Tariffs on both sides reached triple digits at one point, disrupting supply chains.
  • China raised tariffs on US agricultural products, including soybeans, affecting a key support base for President Trump.

Sources:

  • The Washington Post
  • Times of Business Desk