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Keeping up with Promises made: US China Trade Agreement Phase 1

Article by Amreen Taneja,

The beginning of this year marked a potential end to the two-year long trade war between US and China dawning a new beacon of hope for collaborative trade relations. The two trading giants signed a trade agreement that offers increased market access to US exporters, reduced tariff rates for Chinese imports as well as the promise for a strengthened intellectual property law framework. This deal calls for China to boost American purchases of goods and services by at least $200 billion by 2022 to shadow the $185 Billion it spent on US goods and service imports in 2017. Beijing is committed to make several significant improvements to its agricultural strategy by getting rid of certain safety regulations that were used by Chinese officials to obstruct a range of American agricultural products. Plans on easing license restrictions and registration regulations viewed by US as trade barriers have also been approved by China. These reforms would benefit several US industries ranging from meat, poultry and fisheries to biotech.

In exchange, The US has promised to halve its tariff rates on the $120 billion worth of Chinese goods enforced on September 1 2019 to 7.5%. Other such tariff reductions by the US have been held off till the ratification of the phase 2 Agreement. One of the cornerstones of this agreement lies in the intellectual property protection action plan which ensures ‘adequate and effective protection and enforcement of Intellectual property rights’ in order to ensure fair and equitable market access for both parties. The deal provides for stronger Chinese legal protections for trade secrets, patents, copyrights and trademarks by increasing criminal and civil penalties to tackle piracy, counterfeit products and online infringements. The agreement also reiterates China's commitments to fulfil existing obligations to eliminate any pressure on foreign companies to transfer technology to Chinese firms as a condition of market access or licensing and to remove any government incentives for such transfers. China was required to present this action plan to strengthen intellectual property protection within 30 working days of the agreement coming into effect on February 15th 2020. However, the current coronavirus crisis appears to have made it difficult for China to deliver on this primary component of the deal. In its defense, China is claimed to argue the position that they are not in fact late, as the number of working days in the country was significantly decreased due to the lockdowns.

The Covid-19 outbreak known to have started in Wuhan has now spread across the world and has threatened the fragile balance of economic and political ties between US and China. With the US growing increasingly skeptical of Chinese intentions, CNIPA has attempted to iron out the wrinkles by releasing its Opinions on strengthening the protection of IP Promotion plan 2020-2021 on April 20th. This Promotion Plan whose level of compliance with the Phase 1 agreement is yet to be determined still goes a long way in restoring some faith in the possibility of a synergistic trade relation between the two trading blocs.



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