WASHINGTON (Pakistan Point News / Sputnik - 17th January, 2020) The new Phase One trade deal between the United States and China is likely to boost America's domestic jobs market but uncertainly looms over whether mechanisms in the deal can effectively protect patents and intellectual property (IP), analysts told Sputnik.
On Wednesday, Trump and Chinese Vice Premier Liu signed the so-called Phase One trade deal during a ceremony at the White House. The agreement stipulates that China will purchase at least $200 billion worth of US goods over the next two years, respect patents and intellectual property rights, and not manipulate its currency.
The Trump administration in multiple statements claimed that the terms of the deal would be "fully enforceable."
Despite the assurances, the Trump administration is also retaining tariffs on $360 billion worth of Chinese goods to ensure Beijing keeps to the deal.
Former Brown University Assistant Professor of Economics Barry Friedman recalled that Beijing had a long track record of agreeing to enforce copyright and intellectual property (IP) agreements and then simply not bothering to do so.
"This has never worked before with the Chinese. They promise, but can't prove enforcement," Friedman told Sputnik.
It was still unclear whether the Trump administration would commit to tracking how much Chinese companies produced generic drugs for internal consumption while the drugs were still under patent in the United States, the United Kingdom (UK), France or Germany.
US companies would not trust sentiment, so they will take means to thwart copies and save secrets, and keep innovating to stay ahead of cheap copying, Friedman predicted.
Meanwhile, he added, Chinese technology is improving so they can write computer code and produce art, books and silicon chips to their own designs.
However, Alan Tonelson, American research fellow at the US business and Industry Council Educational Foundation, said the new agreement appeared to provide much stronger enforcement provisions to protect IP rights.
"Based on the enforcement provisions, it seems to me that anyone who's IP might have been endangered in or by China before should be feeling pretty pleased - based on those enforcement provisions," Tonelson told Sputnik. "I am less sure that either this deal or any follow-on will do much to reduce Chinese IP theft, but at least victims seemingly will have a much better chance of redress."
China, according to the text of the deal, agreed to dramatically boost imports of US products across several sectors including agriculture, energy, manufacturing, and services, all in exchange for easing tariffs.
Friedman argued that Trump could also point to progress in Beijing's concession that US companies looking to set up manufacturing facilities within China would not be forced to share confidential production details with a partnering local company.
"Any firms who want to produce in China will not need to share technical details with a domestic partner who later becomes a competitor and ships all over the world," he said.
Some of those products such as clothing with all the latest microfiber fabrics are shipped back to the United States, Friedman commented.
"The administration is quoting a number of companies who already produce in China for the Chinese domestic market and they should benefit by not having to work through or intimately with a domestic partner," the professor said.
US companies operating within China may even import from the United States many American-made components and services for the products sold in China, Friedman pointed out.
"Other beneficiaries will be American companies who want to sell in China, and produce wherever else -- we can't tell them where to produce the products," he said.
Friedman cited caterpillar tractors and earth-moving equipment as examples of such machinery products.
"Some companies in banking and finance will benefit because of removal of absolute restrictions to their direct operation in China. It's possible these companies will generate more jobs in America," he continued.
Beijing's commitment to buy energy, such as liquefied natural gas (LNG), just as agriculture, would increase jobs and incomes of Americans, Friedman explained.
As part of the deal, China agreed to not engage in Currency manipulation for the purpose of achieving trade advantages over the United States.
Ahead of the signing of the deal the US Treasury announced that it removed China from its currency manipulation watchlist.
The rising value of the renminbi, Friedman remarked, the international trading version of China's domestic currency, the Yuan had been welcomed in Washington but had factored significantly in the trade talks.
Currency talk, however, played on fantasies of what are the real underlying causes of production and employment change, Friedman noted.
"The Administration now is patting China on the back for what it has been doing for years, allowing the yuan to float upward. Everyone knew that," he said.
Dumping of cheap product surpluses in the United States and other markets had been a consequence of China's internal state industrial planning, not a deliberate integrated part of an international trading strategy, Friedman commented.
"Dumping was not due to artificially low yuan, it was due to China's strategic planning, subsidies and restrictions," he said.
Currencies would float gradually within fairly narrow ranges as they had done since the 1960s, and businesses would have no trouble adapting to and hedging such risks, the professor maintained.
