The Phase One trade deal which was “concluded” on Oct 11 may finally be getting signed. According to SCMP, China’s Vice-Premier Liu He and chief trade negotiator will lead a delegation to Washington on Saturday, where he is expected to sign the phase one deal that will roll back some current tariffs in exchange for a “best effort” by Beijing to import more US ag products.
“Washington has sent an invitation and Beijing has accepted it,” said the anonymous SCMP source, who added that the Chinese delegation is expected to stay “a few days” in the US until the middle of next week, even though neither side has officially confirmed the trip yet.
The signing of a phase one deal during Liu’s trip would mark a point of truce in the bitter trade war between the world’s two biggest economies, one that is expected to boost global markets and brighten increasingly gloomy outlooks for economic growth. That said, it was back in May when trade talks collapsed just hours before the signing ceremony was set to take place, so one never knows…
President Trump said before Christmas that he would “ultimately” have a signing ceremony with President Xi Jinping. “We will be having a signing ceremony, yes,” Trump told reporters. “We will ultimately, yes, when we get together,” he told reporters in Florida.
US trade representative Robert Lighthizer said on December 13 that officials from both countries would sign the phase one trade deal “in the first week of January” and it now appears that will be the first weekend of the year, although the Chinese side has never confirmed the date of the signing, and there is appears to be no indication that Trump and Xi will meet in the coming weeks.
Meanwhile, as SCMP also reports, Cui Tiankai, China’s ambassador to the United States, said in an interview with state broadcaster CGTN last weekend that Beijing will live up to its trade deal commitments. “I think we have full confidence in our negotiators. So let the two teams do their job,” Cui said. “And still they are under the guidance of the two presidents.”
China and the US announced an interim deal on December 13 after more than a dozen rounds of on-off negotiations. The development led to both sides cancelling planned new tariffs due to come into effect on December 15. The US also reduced one batch of existing tariffs from 15 per cent to 7.5 per cent.
It is thought that as part of the agreement, China will make a huge purchase of US farm goods, as well as significant purchases of other American products.
China has remained tight-lipped on the details, with state media only confirming that a deal had been agreed in principle, but that the text needed to be translated, proofread and legally scrubbed. Meanwhile, the Office of the USTR released a comprehensive fact-sheet outlining what it claimed to be in the deal. Lighthizer also took to US airwaves – in a rare media appearance – to discuss the contents of the phase one agreement.
Lighthizer added, in his interview with CBS, that as part of this, China agreed to buy US$80 billion in agricultural products over two years. Both figures – astronomical in terms of previous US-China bilateral trading numbers – led to a deluge of economists trying to establish whether the numbers add up. Unfortunately, as we showed before, they do not.
In any case, news that the signing is on deck helped push S&P futures to session highs even though it is “news” that has been priced in virtually every day for the past three months.
Author: Tyler Durden