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US, China Affirm Plans to Implement Phase One Trade Deal Despite COVID-19 Tensions

Though tensions are running higher than what has been typical between the United States and China, top trade negotiators from both sides agreed to advance plans laid out in the phase one trade deal.

On a call between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and China’s Vice Premier Liu He Friday, China’s state-run Xinhua News Agency said the two sides agreed to “enhance macroeconomic and public health cooperation,” and “create a favorable atmosphere and conditions” for implementing the phase one trade deal signed in January. The parties reportedly pledged to facilitate two-way communication and coordination.

The Office of the United States Trade Representative could not be reached for comment on the call.

In light of the still spreading COVID-19 pandemic, China has reportedly fallen short of the commitments set forth in the initial trade deal, which called for the country to purchase as much as $75 billion worth of U.S.-manufactured goods and, according to Trump, “spend between $200 billion and $500 billion on agriculture over the next two years.”

The phase one deal also saw Trump call off a list 4B batch of tariffs and halve the tariff rate on list 4A goods to 7.5 percent. What it didn’t do was provide much aid for U.S. businesses, as it maintained 25 percent tariffs on tranche 3 goods, including thread, yarns, textiles, handbags and some apparel. It also allowed for China to keep retaliatory tariffs on American cotton, leather, textiles, clothing and shoes.

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News of intent to press on with the trade agreement comes as unexpected in the midst of Trump’s threats to add new tariffs to China in retaliation for its part in the coronavirus crisis, which the administration is asserting was not so much a natural occurrence emerging from a wholesale seafood market in Wuhan, but something that emerged from a research laboratory there.

U.S. Secretary of State Mike Pompeo said on ABC earlier this week, “There’s a significant amount of evidence that this came from that laboratory in Wuhan.”

The World Health Organization (WHO) has expressed a similar sentiment.

“The market played a role in the event, that’s clear. But what role we don’t know, whether it was the source or amplifying setting or just a coincidence that some cases were detected in and around that market,” Dr. Peter Ben Embarek, a WHO expert on food safety and animal diseases, said during a Geneva news briefing Friday.

The notion—as well as the deteriorating economic situation in the U.S.—has the administration’s sensitivities high where China is concerned, and retribution is likely to come in some form, whether or not it manifests as tariffs.