Phase One Trade Deal with China Signed, USMCA Passes Senate
Phase One Trade Deal
On Wednesday, Jan. 15 negotiators for the US and China came together to sign the Phase One trade agreement. The deal, seven chapters in length, covers intellectual property, technology transfer, agriculture, financial services, currency, expanding trade, and dispute resolution. The full text of the agreement can be found here and fact sheets found here.
Though the agreement did not include tariff relief, the President did reaffirm the commitment to cutting the List 4A tariff rate to 7.5% from 15% on Feb. 14. As a reminder, List 4A is primarily clothing. According to Bloomberg, unnamed officials have indicated that no additional tariff relief is to be expected until after the 2020 election.
Notably, China has posted its weakest economic growth in 29 years according to Reuters.
US-Mexico-Canada Agreement (USMCA)
While many believed USMCA passage might not occur in the Senate until after the impeachment trial by the Senate, on Jan. 16 the Senate passed USMCA 89-10. Next, the bill headed to the President’s desk where he is expected to sign by the end of January.
However, the President’s signature does not yet mean the agreement is in force. Mexico and Canada must take the necessary measures to comply with the agreement. A slight delay can be expected as the Canadian parliament doesn’t resume until Jan. 27. When both countries have taken the appropriate steps, the President must notify Congress in writing 30 days prior to entry into force of the agreement of such action. Still the agreement enters into force after the President and government of Mexico and Canada follow-through with all specified implementing procedures. This is expected in 2020, though the exact timeline remains uncertain.