AP Photo/Andrew Harnik
- The US and China are closing in on the first phase of an agreement to defuse a more than yearlong tariff dispute.
- A truce reached this month stalled planned tariff escalations, but there have been few details about how core issues would be resolved.
- Here's what we know so far.
- Visit Business Insider's homepage for more stories.
The US and China are closing in on the first phase of an agreement to defuse a more than yearlong tariff dispute, according to trade officials. A truce reached this month stalled planned tariff escalations, but there have been few details as to how core issues would be resolved. Here's what we know so far.
AP Photo/Jose Luis Magana
Intellectual property rules, which were cited in the US Section 301 investigation that launched the trade dispute, have emerged as a key point of contention between the two sides. President Donald Trump has said the partial agreement included unspecified commitments that would help protect American companies.
SAUL LOEB/AFP/Getty Images
China said Tuesday it would "neither explicitly nor implicitly" force foreign companies to transfer technologies, a practice that has long been seen by the US and other countries as an economic aggression. But China has denied that it engaged in that practice to begin with, leaving some experts skeptical of change.
"The Chinese need money and want US tariffs removed," said Derek Scissors, a resident scholar at the conservative-leaning American Enterprise Institute. "Their level of interest in true liberalization remains minimal."
In August, the Treasury Department designated China a currency manipulator for the first time since 1994 after the yuan breached a key level. Experts questioned the move because it was unclear whether the depreciation was in line with market forces.
Both sides are already barred from wielding their currencies as a weapon to compete in the international market. Trump, who often criticizes the relative strength of the dollar, said that the first phase of a trade agreement would include unspecified currency terms on a bilateral level.
Scott Olson/Getty Images
China has already resumed some purchases of American agricultural products, a demand that has become increasingly important for Trump as he campaigns for re-election. The purchases are not expected to bring farm exports above levels seen before the trade dispute, which had sent them sharply lower.
More broadly, Trump has derided the overall trade deficit with China. While an agreement to purchase other US goods could address those concerns in the near-term, trade balances are influenced by a flurry of other factors including foreign exchange rates and the strength of an economy.
Dispute resolution mechanism
NICOLAS ASFOURI/AFP/Getty Images
The US has struggled to secure an enforcement mechanism that would lock China into economic commitments, which it has been known to backtrack on in the past. The last time the two sides were seen as on the verge of a trade deal, China reversed on pledges to rewrite related domestic laws.
"The real test moving forward will be in monitoring and enforcement of these commitments, especially with respect to technology transfers," said Mary Lovely, a trade scholar at the Peterson Institute for International Economics.
AFP PHOTO via Getty Images/Bryan R. Smith