U.S., China reaffirm commitment to Phase 1 trade deal in
phone call
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[August 25, 2020] By
Eric Beech and Roxanne Liu
WASHINGTON/
BEIJING (Reuters) - Top U.S. and
Chinese trade officials have reaffirmed their commitment to a Phase 1
trade deal, which has seen China lagging on its obligations to buy
American goods, giving a boost to financial markets on Tuesday.
The pledge was made in a telephone call between U.S. Trade
Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin
and Chinese Vice Premier Liu He - their first formal dialogue since
early May - amid concern the deal could be on shaky ground because of
worsening U.S.-China ties.
"Both sides see progress and are committed to taking the steps necessary
to ensure the success of the agreement," the U.S. Trade Representative's
office (USTR) said in a statement after what it described as a regularly
scheduled call.
The call was originally expected on Aug. 15, six months after the trade
deal was launched.
But President Donald Trump, who has frequently expressed anger at China
over the novel coronavirus pandemic, said last week he had postponed
talks with China because "I don't want to deal with them now."
Washington and Beijing have traded sanctions and barbs over a growing
list of issues including a new national security law imposed on Hong
Kong, China's disputed territorial claims in the South China Sea, the
coronavirus and U.S. accusations of national security threats posed by
Chinese tech firms.
China's commerce ministry confirmed that the two sides had a
"constructive dialogue" and agreed to continue pushing forward the
implementation of the Phase 1 trade deal.
The USTR said they "addressed steps that China has taken to effectuate
structural changes" on issues including protecting intellectual property
rights, removing impediments for U.S. firms in the financial services
and agriculture sectors and eliminate forced technology transfers. "The
parties also discussed the significant increases in purchases of U.S.
products by China as well as future actions needed to implement the
agreement," it said.
News of the call helped lift global stocks and Asian currencies.
"U.S.-China talks are bullish for most commodities as Trump is desperate
for good news to help in the election," said Ole Houe, director of
advisory services at agriculture brokerage IKON Commodities in Sydney
"It could lead to higher demand for U.S. products."
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Chinese and U.S. flags flutter near The Bund, before U.S. trade
delegation meet their Chinese counterparts for talks in Shanghai,
China July 30, 2019. REUTERS/Aly Song
'KEEP BUYING'
Chinese purchases of U.S. goods are running well behind the pace needed to meet
a first year increase of $77 billion specified in the deal, according to
official data.
While China has recently ramped up buying of farm goods including soybeans, it
is far from meeting its commitment to buy $36.5 billion worth of U.S.
agricultural goods under the deal - purchases that Trump has counted on to
bolster his support in farm states that backed him in the 2016 election.
The United States exported just $7.274 billion in agricultural goods to China in
the first half of the year, according to the U.S. Census Bureau.
The U.S. comments "showed that they think we are going to keep buying from the
U.S., at least before the election takes place. And we will," an agricultural
goods trader with a Chinese state-owned firm told Reuters, declining to be
identified as he is not authorized to speak to media.
"We are definitely going to maintain the stance to buy as much as possible, but
it is really hard to say whether the targets can be reached."
Sushant Gupta, research director at the Wood Mackenzie consultancy, said it
expects China to import more American LPG, propane and ethane in the second half
of this year to meet petrochemical feedstock shortages, but does not expect
China to be able to increase U.S. crude imports enough to meet the Phase 1
targets.
China bought only 5% of the targeted $25.3 billion in energy products from the
United States in the first half of 2020. Chinese state-owned oil firms have
booked tankers to carry at least 20 million barrels of U.S. crude for August and
September.
(Reporting by Eric Beech in Washington, Roxanne Liu and Tony Munroe in Beijing;
additional reporting by Naveen Thukral in Singapore and Hallie Gu and Muyu Xu in
Beijing, and Shivani Singh; writing by Se Young Lee; Editing by Mohammad Zargham
& Shri Navaratnam)
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