The preliminary trade deal between the United States and China is the first step in correcting an imbalance of more than $300 billion in commerce between the world's two economic superpowers.
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“We’ve now gotten to the point where we have a very good phase one agreement and we’re going to find out whether or not it works,” U.S. Trade Representative Robert Lighthizer told FOX Business’ Maria Bartiromo exclusively.
“Is this agreement going to solve all the problems between the United States and China? No, for sure not, but it has real, real structural change,” he said.
Lighthizer said that in addition to requiring agriculture purchases by China, the pact has protection against intellectual property theft and technology transfer, opens financial services, includes currency safeguards and eliminates barriers to the sale of U.S. farm products in the country.
The Trump administration expects the deal, which is “totally enforceable,” to almost “double overall exports to China,” according to Lighthizer. The U.S. still has tariffs on about $380 billion of Chinese goods that were imposed in an effort to force Beijing to negotiate a broad trade agreement.
As part of the agreement, China has promised to purchase $200 billion of new U.S. products in the next two years from the manufacturing, energy, agriculture and services sectors.
Before the trade war began, in 2017, China was buying $24 billion of U.S. farm products, Lighthizer said. With the partial trade deal, China will buy an additional $16 billion of goods over each of the next two years and is striving for another $5 billion. Combining that with purchases such as forest products, hardwood and lumber, China's purchases would rise to $50 billion, Lighthizer said.
“This is not just about purchasing. This is about structural change,” Lighthizer said. “This is about taking the first big step to determine whether or not two different systems can work together in the future to their mutual benefit.”
He concluded: “Hopefully, we'll find a way that we can both get rich.”