13 December 2019   Leave a comment

The US is claiming that it has reached a “Phase 1” trade agreement with China. It is not, however, clear what the agreement actually covers. The US will not implement the tariff increases President Trump had threatened to impose on 15 December. Additionally, the 15% tariffs will be reduced to 7.5% but the 25% tariffs will remain in place. Finally, there are promises that China will increase its agricultural imports to $50 billion a year, a level never before attained in any year in the past. According to Al Jazeera:

“The United States Trade Representative’s (USTR) office said in a statement that Washington will maintain 25 percent tariffs on about $250bn worth of Chinese imports and reduce tariffs imposed on $120bn worth Chinese goods to 7.5 percent.

“The USTR added that the deal requires structural reforms to China’s economic and trade regime and covers contentious areas including intellectual property and Beijing’s practice of forcing US firms to transfer technological know-how to Chinese partners. Agriculture, financial services, currency and foreign exchange are also covered.”

But the news reports do not specify any particular actions the Chinese are actually obliged to take in Phase 1. According to Global Times, a media outlet that is regarded as close to the Chinese government:

“In response to the US tariff rollback, China will consider not imposing tariffs on more than 3,300 types of US goods, including auto parts and chemicals due on December 15, Chinese officials disclosed.

“China will also expand agricultural imports from the US, including soybeans, poultry and pork to fill up vacancies in China’s domestic market.

“The text of the phase one deal includes nine chapters ranging from intellectual property rights, technology transfers to the exchange rate and agriculture. More detailed terms and data will be released later.”

I suspect that the Phase 1 agreement was designed to give the US a graceful way to not impose the 15 December tariffs and is not really a concrete proposal. We will have to wait for more details, but at this point I suspect that the US has been played by the Chinese.

Algeria has experienced protests against the government for over a year. A seeming breakthrough was achieved last April with the ouster of President Abdelaziz Bouteflika who was seeking a fifth term despite being seriously ill. Since April there have been protests by those who did not wish anyone associated with the Bouteflika regime to be installed in his place. But an election held on Thursday gave a Bouteflika associate, Abdelmadjid Tebboune, the position with 58% of the vote. The protesters believe that army chief Gen Ahmed Gaid Salah is the real power broker in the country and that Tebboune is simply Salah’s puppet. The underlying concern is the degree of corruption in Algerian politics and the absence of any meaningful changes since Bouteflika stepped down. According to Reuters:

“Aside from the months-long political crisis, he will also face Algeria’s most difficult economic situation in decades, with declining energy revenues and bitter cuts to state spending.

“Energy exports, the source of 95% of state revenue, fell 12.5% this year. The government has burnt through more than half its foreign reserves since energy prices began dropping in 2014, and has approved a 9% cut in public spending next year, while keeping politically sensitive subsidies untouched.”

The election does not appear to have resolved anything and we will have to watch to see if further changes are required to bring political stability to the country.

Posted December 13, 2019 by vferraro1971 in World Politics

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