President Donald Trump has confirmed via Twitter that the United States and China have agreed to a “Phase One Deal.” In this agreement, China will reportedly purchase $200 billion of U.S. products and services over the next two years, including an apparent agreement to purchase $40-50 billion of agricultural goods. In addition, China has agreed to expand access to its financial services market and address certain aspects of its intellectual property protections. The United States, in return, will not implement Section 301 tariffs on List 4B products, which were scheduled to go into effect this Sunday, December 15, and will reduce Section 301 tariffs on List 4A products by half, from 15 percent to 7.5 percent. Section 301 tariffs on products appearing on Lists 1-3, however, will remain at 25 percent.

According to an Office of the U.S. Trade Representative (USTR) press release, the United States and China have reached a “deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.”

UPDATE 12/16/19: While no formal documents have been released, USTR has prepared a Fact Sheet summarizing key areas of the agreement. It indicates that the Phase One agreement will address two key aspects of the related Section 301 investigation into certain trade practices of China: (1) Intellectual Property protections – addressing concerns in the areas of trade secrets, pharmaceutical-related intellectual property, geographical indications, trademarks and enforcement against pirated and counterfeit goods; and (2) Technology Transfer protections – setting forth binding and enforceable obligations to address certain unfair technology transfer practices of China. The fact sheet also discusses structural barriers to agricultural trade; reducing trade and investment barriers to U.S. financial service providers; policy and transparency commitments related to currency practices; and dispute resolution measures. Both USTR and Chinese Ministry of Commerce officials have indicated that the text must undergo further legal review and translation.