China trade agreements
Trade is one of the most important parts of the economy, and we cannot ignore its impact. Economic globalization is advancing economic integration and interdependence of nations, economies across the globe worked to strengthen the nation’s development and financial stabilities. Over the decades, nations emerged under a framework of general agreement over trade issues such as cutting down on trade barriers. Just like other nations, China has been part of a regional trade agreement which determines how it does business with its partners (Rodrik, 2018). For instance, China has had a trade agreement with the US in recent times to reduce the tension that exists between them. The paper will discuss China’s trade agreement with the US and the impact of trade agreements.
A regional trade agreement (RTA) is a treaty that is formed between two or more governments that defines the rules and regulations of trade for all the parties involved. China as a nation has been increasingly active on the regional trade agreements frontline since world trade organizations (WTO) happened in 2001 (Antkiewicz & Whalley, 2011). These agreements, contrary to the US and EU cases, have no tangible form of agreement. For instance, China has concluded about twelve regional trade agreements, and it has about six regional trade agreements under negotiations and about four under consideration. The concluded trade agreements were done between China and smaller nations while the ones under considerations are with major trading areas like the US, India, and Korea among others. China’s needs drive all these for exports on its products and also to obtain essential products from trading partners.
China and the US have experienced trade wars over the years. The US and China are the world’s largest economies; hence their trade relations could have a global impact. China and the US agreed to a temporary move to ease trade wars after at the G20 summit where the negotiators from both parties met. According to the agreement, both nations will back-off raising tariffs or introducing new tariffs for three months until 1st Match 2019 as they work for a bigger trade deal. In addition, “China will buy more US goods and services particularly agricultural, and energy products and will stop the trade of Fentanyl which is a synthetic opioid made mainly in China” (Dorcas and Alexander, 2019). As part of the agreement, the US will also recognize the importance of China’s OBOR initiative which is an initiative to advance China’s economic interdependence in Asia. Therefore, it is apparent that the agreement was of mutual benefit to all the partners.
The US-China trade agreement could result in worthwhile new market access for US exports to China. Netflix Corporation based in the US has faced a lot of hindrance to its intended market in China. The corporation shortlisted China as one of its target markets, but the trade restrictions in the country made the process difficult and challenging. However, with the current US-China agreement, the corporation stands a chance to use the opportunity to enter the market (Joshua, 2017). Reducing trade restrictions and regulations for doing business with the US, will allow Netflix to sell their products to China. In light of this, the agreement will break the barriers to competing US-technologies such as video streaming technologies. Through this, Netflix products will be able to get a license to operate in China.
Trade agreements mainly involve the removal of trade restrictions between nations. These restrictions could be duties, licensing policies, quotas, and surcharges. The elimination of these restrictions is usually described as the promotion of free trade. On the other hand, the trade agreement could also involve other trade propositions to guide their operations as they export and import products and services. China as a country has had a variety of trade agreements with both small nations and major nations to boost their involvement in trade relations. For instance, the China-US trade agreement comes after a trade tension between the two nations. The major content for the agreement was on the elimination of restrictions on trade. It is apparent that the role of the agreement is to ease trade tension that has been going on between the United States of America and China. That said, just like any other project, there exist benefits to its effect. Netflix Corporation would take advantage of the agreement to operate in China market.
Antkiewicz, A., & Whalley, J. (2011). China’s new regional trade agreements. In China’s Integration into the World Economy (pp. 99-121).
Joshua P. Meltzer (2017, May 15)..www.brookings.edu/blog/order-from-chaos/2017/05/15/the-u-s-china-trade-agreement-a-huge-deal-for-China/
Dorcas Wong and Alexander Chipman Koty (2019, February 25) www.china-briefing.com/news/the-us-china-trade-war-a-timeline/
Rodrik, D. (2018). What do trade agreements do? Journal of economic perspectives, 32(2), 73-90.