I've just had a chance to read the full copy of the US Chinese Trade Agreement. The New York Times has a copy, and I've included a link at the bottom of this article.
The first thing to know about this document is that it is nothing like we are being told. In reading all I could before the signing of this agreement, I came to the conclusion, that this would be a milk-toast agreement. Most of the emphasis would be on encouraging China to purchase US goods.
And that part is certainly here. And its the reason that we're seeing the American farmers, in particular, celebrate the agreement. They will be one of the first beneficiaries. All together the Agreement requires China to purchase an additional $76 Billion in US goods over the course of the next year, much of which will be agricultural.
This is certainly nothing to sneeze at, but it is far from the most important provisions in the Agreement.
Unfortunately, this seems to be all that the press is focusing on. Perhaps that's understandable IF this were a normal trade agreement. But it most assuredly is NOT a normal trade agreement. To me, trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin reached for the brass ring, and they got it.
I encourage you to take 10 minutes and read the Agreement especially Article 1. In Article 1, you'll find a complete outline of the Agreement on Intellectual Property. I doubt that you've heard much if anything about this if you've listened to the mainstream media. But to me, this is the heart and soul of this agreement.
To be blunt: for years China has been stealing the intellectual property of the businesses and organizations that operate in the PRC. In fact it has been part of their requirements to do business there. We've seen companies like Apple and Boeing accede to their demands, and make concessions just to gain access to the Chinese markets.
Well, this Trade Agreement completely turns the tables on that old way of doing business.
In fact, the Agreement switches the Burden of Proof from the American side, where it has been all these years, to the Chinese. So under the new agreement, if the Chinese are accused of stealing intellectual property, they, not the American's, must prove that is not the case.
This alone is a game-changer.
It is a real way for the innovators and producers of new and innovative products to find protection from what has been a predatory Chinese environment.
In a moment we'll talk about how these provisions will be enforced. But suffice it to say that for the first time, the American side has some recourse from the theft of intellectual property.
Next, the Agreement lays out the full scope of the protection of intellectual property. We're inclined to think of IP, only in terms of new technology, but as the Agreement delineates, it goes far, far beyond just tech. The Agreement spells out Intellectual Property Theft, in such fields as: pharmaceuticals, patents. E-commerce and trademarks. If this Agreement is adhered too, the days of the “Cheap” Chinese Knock- Off are numbered.
Which brings us to the topic of enforcement. This Agreement will have the full force of international law behind it. And will be fully enforceable. But we know that the Chinese have not always complied with the provisions of past international agreements.
And here is where the genius of the Trump Administration lies. The ultimate enforcement is already in place. In fact, it is what I believe brought China to the table in the first place. Tariffs brought the Chinese to negotiate. And in the end Tariffs will enforce this agreement. Remember, most of the US Tariffs on Chinese goods in place before this agreement will remain. And can be increased, as needed, at any time.
This marks the very first time that the American side has had a viable means of enforcing an agreement. And the President has demonstrated his willingness to use these sanctions.
So this past Wednesday, Vice Premier Lui He and President Donald Trump signed Phase 1 of a Trade Agreement which goes far beyond anything that the Americans have been able to achieve before.
Let's hope that it provided the foundation for a fair and balanced trade relationship between the World's two largest economic powers.
Here is that link: