US Administration Addresses Digital Trade in Trade Deal Phase Two

U.S. President Donald Trump and China’s Vice Premier Liu He signed Phase One of the trade deal in mid-January. China committed to purchasing an additional $200 billion worth of goods and services over two years, and the U.S. will rollback tariffs imposed on Chinese imports. 

As Phase One of the deal was signed off, the second phase is coming into focus. 

Although we don’t yet know what changes Phase Two will bring, U.S. officials have stated that the U.S. plans to include agreements regarding digital trade, cross-border data sharing, and cybersecurity. As the upcoming negotiations will address issues that are politically sensitive for Beijing, the talks will likely be tougher than the first round. 

Will there be a U.S.-China Bilateral Trade Agreement? 

Phase Two could also introduce a U.S.-China Bilateral Trade Agreement (BTA). BTAs usually deal with the tax aspects of trade between the two countries. So far, the U.S. and China do not have such an agreement in place, which is a challenge for American businesses operating in China. Phase Two could introduce a BTA, or at least provide the platform for further negotiations. 

The major conflict during Phase Two negotiations will be the fight of both nations to get the upper hand in developing new technologies. China wants to have better access to American innovation. The U.S., on the other hand, will try to prevent this from happening and instead try to strengthen intellectual property rights. 

The protection of technological secrets has been a significant concern of U.S. companies for years, as China forces foreign businesses to transfer their technologies to Chinese rivals, which is primarily an issue with Sino-Foreign Joint Ventures. The U.S will likely address this issue in Phase B of the trade deal. Changes could, for example, include more severe penalties for patent infringements.

U.S. President Donald Trump said his administration would begin negotiations “immediately.” But these talks will take time, probably much more time than the first phase. 

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