The currency deal contains commitments by China to refrain from competitive currency devaluations and not to align its exchange rate with a trade advantage — language China has accepted for years as part of its commitments to the group of 20 largest economies. Soybean exports to China will remain at only 63 percent of the deal`s proportional target until October. With oilseeds accounting for nearly 60% of the value of agricultural exports covered by the Phase One agreement, data from the last two months of 2021 could improve the sector`s performance. Soybean exports are currently estimated at $13 billion, although China can make significant purchases, as November and December are historically among the largest shipping months of the crop. . a Member shall not seek, adopt or maintain voluntary export restrictions, orderly marketing arrangements or other similar measures on the export or import side. This includes measures taken by an individual Member as well as measures under agreements, understandings and arrangements concluded by two or more Members. Any such measure in force on the date of entry into force of the WTO Agreement shall be brought into conformity with this Agreement or phased out. First, if the US takes action, China can either accept the remedy, along with a promise not to retaliate, or withdraw from the Phase One agreement. The latter option would be more harmful than the remedy itself.

From a purely economic point of view, all the objectives achieved under the agreement are better than the alternative of returning to trade wars with China. Assessing progress towards the objectives of the first phase of trade in goods requires information from both U.S. export statistics and Chinese import statistics, as stated in Article 6.2.6 of Chapter 6 of the Agreement: „Official Chinese trade data and official U.S. trade data will be used to determine whether this chapter has been implemented.” One implication is that there are two monthly data sets that need to be tracked (Chinese imports and US exports). Second, there are two different annual and therefore monthly targets, as the base level of Chinese imports for 2017 is different from the base level of U.S. exports in 2017. Finally, the products covered by the purchase obligations are listed at the level of 4, 6, 8 or 10 digits in the Appendix to the Agreement to Annex 6.1; these are then mapped to US or Chinese trade statistics for 2017 and 2020. As of our October 26, 2020 report, we included the U.S. export product 8800 (in addition to the 8802 aircraft) in the „covered manufacturing” and total quantity and removed it from the „not covered” category. Beginning with our October 26, 2020 report, we have seasonally adjusted the monthly purchase commitment targets to reflect the relative weight of these products for that month in the 2017 trading data.

It should be noted that the proportional increase in the annual targets for 2020 on a monthly basis is provided for information purposes only. Nothing in the text of the agreement suggests that China needs to achieve anything other than the annual targets. For U.S. export data and Chinese import data, the first phase targets for additional trade for 2020 (in addition to the 2017 base year) are $12.5 billion (agriculture), $32.9 billion (industrial goods) and $18.5 billion (energy). These objectives are set out in Annex 6.1 of the Agreement. Some agricultural products have not recovered from the effects of the trade war. U.S. exports of raw hides and skins account for less than one-third of the expected target. After being hit by Chinese tariffs, U.S. lobster exports remain only half the expected level. U.S. agricultural exports are also not on track to meet the commitments of the first phase, although they have performed relatively well.

In October 2021, agricultural exports accounted for 83% of the proportional targets, compared to 82% in the middle of the agreement (Figure 3). As in the manufacturing sector, U.S. agricultural exports to China were devastated in 2018 and 2019 due to the trade war. Contrary to its policy of denying production aid, the Trump administration compensated farmers with billions in subsidies, resulting in a net income from agriculture that was 5% higher in 2019 than in 2017. Federal subsidies continued; Net farm income was even 20% higher in 2020 and is expected to be 20% higher in 2021. The agreement subjects all breaches of monetary obligations to the enforcement mechanism of the agreement, under which they could occur for the United States. . . .