U.S.-China Trade Deal: What’s in (and Not in) the Agreement

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To ensure prompt and effective implementation of this Agreement, the Parties establish the following Bilateral Evaluation and Dispute Resolution Arrangement (the “Arrangement”).

Among the biggest questions going in to the negotiations with China was how any agreement would be enforced. Having watched previous agreements with China fail to live up to their promise, many American experts and business executives were skeptical that the Trump administration could get China to keep the commitments it makes.

The new deal creates something called the Bilateral Evaluation and Dispute Resolution Offices to receive and evaluate complaints. The deal also includes an appeals process where issues can be elevated from midlevel officials all the way up to the offices of the United States trade representative and the vice premier of China.

If the United States or China believes that the other is acting in bad faith, either country can give written notice and withdraw from the deal. Of course, Mr. Trump has already made clear that under such a scenario he would impose more tariffs on Chinese imports, thus returning the two countries to a trade war footing.

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The Parties shall work constructively to provide fair, effective, and nondiscriminatory market access for each other’s services and services suppliers. To that end, the Parties shall take specific actions beginning with the actions set forth in this Chapter with respect to the financial services sector.

It’s not clear that the agreement gives the United States big new gains in financial services. In an attempt to defuse tension with the Trump administration, China had already moved in 2017 to give foreign firms more sway in its financial sector, and American banks and other firms have been taking majority stakes in Chinese ventures.

For years, credit card companies Visa, Mastercard and American Express sought entry into China. In the deal, China agreed to accept license applications by these companies, but it did not automatically grant them access to its market. Even if China did approve their applications, it is not clear that those businesses would make many inroads in the country’s advanced electronic payment system, which is dominated by domestic companies.

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The Parties shall refrain from competitive devaluations and not target exchange rates for competitive purposes, including through large-scale, persistent, one-sided intervention in exchange markets.

Mr. Trump has long been a critic of China’s currency policy, arguing that it weakens the renminbi to achieve a competitive advantage for its exports. Last year the Trump administration labeled China a currency manipulator, before removing the tag this week as a result of China’s new currency commitments.

The country has pledged not to competitively devalue its currency and has promised to be more transparent about its interventions in foreign exchange markets.

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