«We need to make sure that this is properly implemented,» Lighthizer said. «This is the first agreement of its kind, and we need to make sure it works.» 3. See appendix to the basic methodological approach. For more information, see Chad P. Bown, China-China Phase One: China`s Purchases of American Products (September 2020), PIIE Chart, October 26, 2020. It`s not the anchor that some thought it could be,» said Scott Kennedy, a Chinese expert at the Center for Strategic and International Studies, who called the status of the trade agreement – if reports on Chinese orders to stop purchases are confirmed – «suspended on the wire.» Tariffs imposed by the United States and China on imports from each other have decimated bilateral trade in 2018 and 2019. The Trump administration negotiated the legal text of the Phase 1 agreement to force China to buy an additional $200 billion of U.S. goods and services in addition to 2017 (not 2019) if bilateral trade was more robust.2 The legal evaluation of the agreement therefore requires a comparison of 2020 with 2017. Since Washington and Beijing signed the so-called phase one agreement earlier this year, just as the pandemic has shaken global (and especially Chinese) economic activity, the agreement has been in trouble. Its very ambitious targets – a huge increase in exports of U.S. energy, agricultural products, production and other goods to the United States this year and next – have always been difficult to achieve.
The only thing that has been complicated by the pandemic, for example, is a strong pressure on Chinese demand for U.S. oil and natural gas, whose sales are far from close to the original targets. «We mark more than just an agreement. We are marking a change in international trade,» Trump said at a noise ceremony, referring to former FBI Director James Comey, impeachment proceedings and a possible july 4 visit to Mount Rushmore for a fireworks display. U.S. sales of cars, trucks and parts also fell to just 33 percent of the previous target. Before the trade war, China was the second largest export market for U.S. vehicles. In July 2018, China returned the favor against Trump`s tariffs with a 25% tariff on U.S. cars. U.S. exports then fell by more than a third due to the relocation of production for Chinese consumers to other sites and the non-recovery of U.S.
exports since then. Tesla, for example, announced in late 2018 that it would accelerate construction of a new plant in Shanghai and relocate U.S. production to Chinese consumers. The company stressed that Trump`s tariffs on auto parts and China`s retaliatory measures against finished cars had not made U.S. exports to China competitive. In response to this trade war policy, BMW has relocated some of its production from South Carolina to China.5 The big question now, some say, is not whether the trade deal will survive, but what form of trade confrontation at a time when the United States will take its place.