US, China reaffirm commitment to Phase 1 trade deal in phone call

Top US and Chinese trade officials have reaffirmed their commitment to a Phase 1 trade deal, which has seen China lagging on its obligations to buy American goods, giving a boost to financial markets on Tuesday, reports Reuters.

The pledge was made in a telephone call between U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He - their first formal dialogue since early May - amid concern the deal could be on shaky ground because of worsening U.S.-China ties.

“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” the U.S. Trade Representative’s office (USTR) said in a statement after what it described as a regularly scheduled call.

The call was originally expected on Aug. 15, six months after the trade deal was launched.

But President Donald Trump, who has frequently expressed anger at China over the novel coronavirus pandemic, said last week he had postponed talks with China because “I don’t want to deal with them now.”

Washington and Beijing have traded sanctions and barbs over a growing list of issues including a new national security law imposed on Hong Kong, China’s disputed territorial claims in the South China Sea, the coronavirus and U.S. accusations of national security threats posed by Chinese tech firms.

China’s commerce ministry confirmed that the two sides had a “constructive dialogue” and agreed to continue pushing forward the implementation of the Phase 1 trade deal.

The USTR said they “addressed steps that China has taken to effectuate structural changes” on issues including protecting intellectual property rights, removing impediments for U.S. firms in the financial services and agriculture sectors and eliminate forced technology transfers. “The parties also discussed the significant increases in purchases of U.S. products by China as well as future actions needed to implement the agreement,” it said.

News of the call helped lift global stocks and Asian currencies.

“U.S.-China talks are bullish for most commodities as Trump is desperate for good news to help in the election,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney

“It could lead to higher demand for U.S. products.”