The deal leaves tariffs on about $360 billion in Chinese imports, with the government`s leverage hoping to generate concessions in the future. Not only does not rely on purchasing objectives address China`s problematic policy, which harms Americans, but it also helps to consolidate government planning, contrary to market results. In particular, because China continues to impose discriminatory retaliatory duties on U.S. exporters, only its state-owned enterprises, not the Chinese private sector, will increase many purchases to meet their commitments, the opposite of what U.S. politicians say they want. The objectives of the agreement also send signals to America`s allies that the United States is primarily interested in China diverting imports from its suppliers, rather than attacking China`s problematic policies and undermining their confidence in U.S. policy. The Phase 1 agreement requires China to strengthen its intellectual property regime in a number of areas, including illegally manufactured and falsified products and medicines. It also requires China to improve its protection of trade secrets and confidential trade information. China has also agreed on tougher penalties for IP theft to prevent theft.
With respect to merchandise exports to the United States, the agreement is estimated to include $95.1 billion in goods, or 73% of total U.S. merchandise exports to China ($129.8 billion) in 2017. Of total exports of covered products in 2017, exports amounted to $20.9 billion for agriculture, $66.5 billion for manufacturing and $7.6 billion for energy. The products discovered by the agreement – and therefore without a 2020 target – accounted for 27% ($34.7 billion) of total U.S. goods exports to China in 2017. Read the nearly 100-point trade agreement between the United States and China A3: the commitments made under the "Macroeconomic Policies and Exchange Issues" chapter of the Phase 1 agreement do not go beyond what has already been agreed in the G20, including avoiding competitive devaluations and the direction of exchange rates for competitive purposes; and the International Monetary Fund (IMF), in particular to avoid exchange rate manipulation. Indeed, the transparency obligations under the agreement explicitly acknowledge the absence of new commitments, indicating that the United States and China continue to "publicly" disclose international reserves and balance of payments data. What is new is the possible dilution of the Department of Finance`s role in dispute resolution, which will focus on the bilateral dispute assessment and settlement agreement under the USTR. UsTR, on the other hand, can consult with other agencies, but there is no obligation, which places the Ministry of Finance in a secondary role in macroeconomic and exchange rate issues. (On this point, it should be noted that the agreement has confirmed the autonomy of monetary policy for both the United States and China; and that each party may request IMF participation.) Another aspect of the agreement is the tension between exchange rate flexibility – long the objective of the US exchange rate commitment with China – and exchange rate stability. This tension probably reflects U.S. concerns that market forces could weaken the Chinese renminbi against the dollar, a sentiment reflected in the Treasury`s latest currency report, which, while removing China`s name as a currency manipulator in August 2019, raised concerns about the "persistent strength of the dollar." On February 14, 2020, the economic and trade agreement between the United States of America and the People`s Republic of China came into force: Phase 1.