Here’s Ethan Harris and the BofA Merrill US Economics research team on the trade deal:
The more interesting part of the deal is China’s agreement to dramatically increase imports from the US. China is tasked with increasing agricultural, manufacturing, energy and services by more than 50% this year with another sharp increase in 2021. We remain skeptical that China can hit these targets. The deal claims that the “purchases will be made at market prices based on commercial considerations and that market conditions…may dictate the timing of purchases.” It is hard to reconcile these very aggressive quotas with the idea of buying at market prices.
What happens if China falls short of the targets? The enforcement mechanism allows both sides to judge for themselves whether they are meeting the spirit of the agreement. In the current deal, rather than set up an independent arbiter-like the WTO or a set of impartial judges-each side sets up its own group to monitor implementation. If conflicts are not resolved within 90 days each side has the right to take “proportionate” actions, including abandoning the deal.