Mobility Talks panelists give 'Phase I' mixed reviews

WASHINGTON — The "Phase I" trade agreement between the U.S. and China received mixed reviews from panelists at Mobility Talks International, held Jan. 22 as part of the annual Washington Auto Show.

"The good news is that the U.S. and China have signed a truce," said Mary Lovely, senior fellow at the Peterson Institute for International Economics, regarding the agreement signed Jan. 15. "We can expect no new tariffs, at least for a while."

The bad news is that U.S. auto and auto parts manufacturers are not among the beneficiaries of the Phase I pact, Ms. Lovely said.

Of all U.S. manufacturing sectors, autos and auto parts suffered the biggest impact from the escalating tariffs between the U.S. and China during the Trump administration, she said.

"Trade wars are not very good for exports as well as imports," Ms. Lovely said. "They are also not very good for the trade deficit."

Government and industry must assess the Phase I agreement to determine how it affects business investment, she said.

"The U.S. has now officially endorsed managed trade. The jury is still out on whether the high cost of the trade war was worth it."

Alan R. Turley, deputy assistant secretary of commerce for China and Mongolia, praised Phase I as "a step toward a more balanced trade relationship" between the U.S. and China.

Mr. Turley said the agreement contains several important concessions on China's part, especially in the areas of trade-secret protection and enforcement against trademark pirating.

"China also promised to stop forcing American companies to transfer technology in exchange for market access," he said. Previously, the Chinese boards that controlled licensing were filled with representatives of companies in competition with U.S. firms.

"Phase I represents a strong commitment to enforceability," Mr. Turley said. "But the biggest part for our office is that China committed to buying $200 billion worth of goods and services from the U.S. over the next two years. This is a tremendous opportunity to sell new goods and services to China."

Craig Allen, president of the U.S.-China Business Council, said his organization also welcomes Phase I.

"The agreement opens up the financial services market to U.S. entities," Mr. Allen said. "While it's a little bit tangential to the vehicle and vehicle parts market, it's important to selling vehicles in China."

However, the auto industry is less happy with other aspects of the agreement, according to Mr. Allen.

"One word that never appears in the text of the agreement is 'tariff,'" he said. "No wonder that auto parts executives are unhappy at that uncertainty."