Washington and Beijing began formal negotiations towards a bilateral investment treaty (BIT) in June 2008. A year later, the highly sensitive talks were halted until July 2013. The US is interested in getting Chinese restrictions on foreign ownership in about 100 sectors — from soybean oil and automobiles to life insurance and other financial services — lifted for US companies which want to expand their market presence there. The Chinese government is interested in getting more security for highly-scrutinised Chinese investments in the US and its massive holdings of US sovereign debt ($1.3 trillion).
In late 2013, China agreed to initiate talks on a possible BIT with the European Union as well.
White House economic adviser said the Trump administration is satisfied with China’s progress in meeting commitments to purchase U.S. goods in a Phase 1 trade deal.
Given the global coronavirus recession, China is lagging behind its first-year goal of a $77 billion rise in purchases.
The US Chamber of Commerce and over 40 trade associations on Monday urged top American and Chinese officials to redouble efforts to implement a Phase 1 trade agreement.
China pledged to buy US$36.5 billion worth of American agriculture products under the phase one deal, up from US$24 billion in 2017, before the trade war.
Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans as Beijing evaluates the ongoing escalation of tensions with the US over Hong Kong.
The Phase One trade deal had China committing to $30 billion in energy purchases. But US energy exports to China actually shrank by 33% in Q1.
More hawkish voices have emerged within China on the phase one trade deal with Washington, with some calling for new negotiations and a tit-for-tat approach on spiraling trade issues.
"The targets were never realistic; they were just gaudy numbers meant to impress. The pandemic made the unrealistic the impossible."
Trump raised concerns of a resumption of economic hostilities with China, threatening to withdraw from the trade deal if Beijing’s purchase pledges come up short.
As Donald Trump ups the pressure on China regarding coronavirus, the hard-fought trade deal between the two countries is falling by the wayside.