What Comes After ‘Phase 1’?

‘Phase one’ has yet to be signed as both sides work toward an agreement. An upset in the agreement the last few days has had market futures trading lower. China announced Thursday they have agreed to roll back tariffs as part of the ‘Phase one’ deal.  The Trump administration announced Friday they have not agreed to such terms.

Phase 1

All of this aside, Jake Parker, Sr. Vice President of the US/China Trade Council broke down what comes after Phase one.

“Phase one we should see signed here in the next month or two although, we should never be surprised when something takes a little longer than expected here in Washington.” 

In Phase One, we are expected to see agricultural purchases, intellectual rights protection, financial services liberation, and currency addressed.

Phase 1.5

“It wouldn’t surprise me to see some kind of phase 1.5”

He says phase 1.5 would address ‘low hanging fruit’ such as purchases of US energy. He adds that phase one is considered putting a floor under the deterioration of the relationship between the two countries and building momentum. Having something in ink is considered positive by both counties and will help with other phases of a trade agreement. 

Phase 2

Phase two and beyond is expected to be where the more difficult issues will be addressed. The phase 2 process will be a more normalized process, according to Parker. Some of the issues that will be included focus more on the business community. The list for phase 2 and beyond issues include; subsidies that are dispersed by the Chinese government, industrial policy, and China’s State Enterprise Reform.

“Frankly it’s going to be hard to get good substant agreements from China”