Trade Agreement Highlights Quoted by Stephen Kho and Clete Willems, According to Law360
The United States and China are set to sign a preliminary trade agreement this week, following negotiations last month. The deal, which includes a chapter addressing financial services, is expected to address rules pertaining to joint venture requirements and limits on controlling ownership.
According to the agreement, China should issue licenses to companies on an equitable basis. However, concerns have been raised about the enforcement mechanism and its durability. Clete Willems, a public law and policy partner at Gump, expressed eagerness to see if the mechanism is built to handle a high volume of trade fights.
One of the key issues that led to the standoff between the two countries was Beijing's insistence that companies turn over sensitive technology as a condition of doing business. The agreement's ability to withstand repeated use and potential retaliation are political questions with open answers.
Another significant issue was China's insufficient protection for foreign intellectual property. Willems expressed concern that China may get rid of equity caps but not grant licenses to U.S. firms. He stated it will be important to ensure there are provisions for a real avenue for U.S. firms to obtain licenses.
Stephen Kho, an international trade partner at Gump, was also quoted in the article. The Phase-One agreement between the United States and China includes provisions that facilitate the issuance of licenses to US companies, but no explicit licensing conditions were found in the retrieved documents.
The Trump administration used tariffs as a means to force China to the negotiating table. However, if the agreement allows for any re-escalation of tariffs, it may raise questions about the utility of the agreement overall.
The article was published by Law360. The concerns about the enforcement mechanism and the durability of the agreement highlight the need for close monitoring and vigilant enforcement to ensure that the agreed-upon terms are upheld.
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