China and the united States have reached a preliminary agreement, after two weeks of negotiations in their teams, to withdraw by stages some of the tariffs that have been imposed on each other in the trade war they have been fighting in the past 18 months. The announcement made this Thursday to the Ministry of Commerce in Beijing, hours after it has been confirmed by a high charge of the Administration of the united STATES, even though require that there is a decision. The president, Donald Trump had already announced its intention to sign an agreement with his chinese counterpart during the APEC summit in Chile, which was to celebrate the next days 16 and 17 in Santiago and has been canceled by the Government of Sebastián Piñera due to mass protests in his country.
This new climate of understanding between Beijing and Washington props up a détente between the two powers. According to the information provided, the two countries “have agreed to eliminate the increase in tariff in phases as they progress their negotiations. This is the result of the constructive negotiations that have been developed in the last two weeks,” he assured the spokesman of the Ministry, Gao Feng, at a press conference. What duties exactly will arise in each phase is yet to be decided, but the two negotiating teams have agreed that each country delete “at the same rate and simultaneously,” according to the spokesman, without providing further details.
The announcement would signal an important step forward in the talks to resolve the trade war that the two countries fought since the spring of 2018, and that has had important consequences on the global economy. In the heat of the trade negotiations, Wall Street has started the session with a rise higher than the 0.9% in the Dow Jones, which reached a new maximum. The S&P 500, which integrates the largest publicly-traded companies, it was 0.6% in the first bars of the day. The closure is moderated to 0.6% and 0.3% respectively.
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the united States had already announced a partial agreement on the 11th of October, after one of the rounds of negotiations held in Washington between delegations leading, on the one hand, the chinese vice premier, Liu I, and, on the other, the secretary of the Treasury and the representative of Foreign Trade of the united STATES, Stephen Mnuchin and Robert Lighthizer, respectively. Then, Washington said it would freeze new uploads of duties that I had planned for that month and that Beijing would increase to more than 40,000 million dollars on their purchases of agricultural products to the first power. The chinese Government confirmed the 26 of October an agreement in principle.
Despite everything, and as confirmed by the economists at ING in a note, it would be a mini-settlement, far from the ambitious plan initial Trump lead to substantial changes in china’s policy concerning the protection of the intellectual property or the exchange rate of the renminbi, which Washington accuses of manipulating to cheapen their products. Until now, the president refused to sign a partial agreement on tariffs if it is not managed to a global compact in the trade relationship with China in a broad sense.
With all that, what is clear is a change in the climate between the two countries, and there is no doubt that the eventual removal of tariffs, to occur finally, it will help to remove a factor of uncertainty for the global economy, in a delicate moment, in which he shows a slowdown. The truce in the battle of duty, in addition, benefits to multinational companies such as Caterpillar, Boeing, Micron, Nvidia, AMD, and Apple, whose businesses depend on China, which will provide an additional stimulus to the markets.
The lack of details requires, however, cautions, and it is known that in the womb of the Administration of the USA there are divisions on how to tackle the negotiation. Washington, in fact, is still keeping at this time to extend the tariffs from the 15th of December to products imported from China by value 156,000 million, which would cover virtually with additional fees the total of commercial exchanges between the two countries.
During the negotiations, Beijing had demanded as an indispensable condition for reaching an agreement that the united States eliminate fully the duties imposed on the dispute. The influential blog Notes Taoran, which usually reflect with great accuracy the opinion of the chinese delegation, had pointed out this week that it was not necessary that these taxes were lifted in their entirety from the outset. It was enough, according to the author of the blog, with the withdrawal gradually.
Gao stressed, this Thursday, at that point in his press conference. “The trade war began with tariffs, and you’ll end up with tariffs,” stressed the spokesman. The own Trump and his two negotiators were optimistic, while at the same time tried not to get ahead of the events. Washington would be at this time willing to cancel the extension of the tariff by the close of the first phase. However, it wants to maintain tariffs for the remainder until the completion of the second phase of the negotiation, that will be harder and will coincide with the elections.
due To the cancellation of the APEC summit, the two delegations are seeking where to be able to celebrate the signing of this agreement. Both countries would need a truce: Washington faces elections within 12 months and the president is facing, in addition, a process of impeachment in the Congress. China sees how the economy slows its rate of growth, while having to deal with a problem, the protests in Hong Kong, that I didn’t have at the beginning of the conflict and who has become the biggest political crisis for Xi since coming to power seven years ago.
In another gesture of rapprochement, China today announced the conviction of nine persons for trafficking of fentanyl, an opiate that last year caused 18,000 deaths in the united STATES. Washington accuses the asian country, the world’s largest producer of this substance, of not doing enough to combat the smuggling of that substance. The us authorities, in fact, provided information to the chinese to desmantelara the operating.
As announced by the Intermediate people’s Court of Xintai, in the north of the country, the punishments, eight of the convicted ranging between six months and life imprisonment. The ninth has been sentenced to death with a reprieve dand two years, Usually, if the convicted person who receives that sentence and shown good behaviour during that term, the sentence was changed to life imprisonment.