The Strategist

The US and China agree on expanding trade turnover

05/21/2018 - 12:55

China has agreed to "substantially increase" volume of purchase of American goods, so both countries will refrain from raising tariffs and declaring trade wars, US and PRC representatives said on after negotiations that ended on Saturday. Details of the transaction have not been announced, and it is expected that their agreement will take additional time. However, according to Finance Minister Steven Mnuchin, China has agreed to increase imports of food and energy products from the United States.

theglobalpanorama via flickr
theglobalpanorama via flickr
The United States and China "have reached consensus on the need to take steps to significantly reduce trade deficits in mutual trade," said representatives of the American White House after Vice Prime Minister of China stated that the parties agreed not to initiate tariff increases. According to him, the countries will increase cooperation in energy, agriculture, health, high technologies and finance. Steven Mnuchin, in turn, said that the deal would increase food exports from the US by 35-40% already this year, while the supply of energy products can be doubled, so the parties "will wait with the use of trade restrictions."

During the first round of talks at the beginning of May, the United States demanded that China reduce its deficit in trade between countries by no more $ 100 billion, and by $ 200 billion by the end of 2020 (now $ 375 billion), reduction of import tariffs by the PRC in most sectors to the level of the US. Previously, they insisted, first of all, on the reduction of import duties on cars as they amount to 25% in the PRC, but are only 2.5% in the US; Beijing has already promised to do so by 2022. Washington was also dissatisfied with supposed theft of intellectual property by Chinese companies. The parties have not reported yesterday if any agreements have been reached in this area. Earlier, the PRC filed a lawsuit with the WTO in response to a US threat to introduce high-tech Chinese goods (investigation of violations was initiated with reference to an American act, previously appealed by the European Union). Import duties of up to $ 50 billion could come into force on May 22.

Now, the United States has to come to an agreement with Brussels. Tariffs for imports of aluminum and steel (10% and 25% respectively), imposed on a number of US trading partners, including the Russian Federation and China, expire on June 1st. Russian authorities have already reported that the United States refused to consult within the framework of the WTO. Affected countries are planning to send a notice to the WTO Council on Trade to impose counter measures against the United States, "equivalent to losses from US restrictions for exports of steel and aluminum." Recall that the US insists that the measure is related to protection of national security and therefore cannot be appealed to the WTO. However, many countries argue that, in fact, new duties represent a measure to protect the market, which allows for the introduction of reciprocal restrictions in the same volume after three year 

In the meantime, Brussels is preparing to impose duties on goods from the United States, without waiting for 2021. The European Commission (EC) has notified the WTO of a list of goods tariffs on which can be raised from June 20th. The list includes food products, whiskey and metal products at $ 1.6 billion. These measures "can be carried out to those and to the extent that the US applies its protective measures in such a way that they affect the products of the union", - the EC warned. In 2003, the EU has already successfully forced the US to lower its steel duties when the WTO recognized them illegitimate.


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