A Phase Two negotiation isn’t out of the question, but Washington must get it right this time, writes former Acting Deputy U.S. Trade Representative (USTR) Wendy Cutler, now a vice president at the Asia Society Policy Institute. Writing in Foreign Policy, Cutler says as the U.S. administration under President-elect Donald Trump prepares to revisit its trade strategy with China, the possibility of a “Phase Two” negotiation emerges. The Phase One trade agreement, signed in 2020, addressed significant issues like intellectual property rights and agricultural barriers but fell short in achieving China’s promised purchase commitments. Since then, economic tensions have escalated, with both nations imposing trade and technology restrictions.
Cutler believes the upcoming challenge lies in overcoming entrenched trade disparities, including subsidies, state-owned enterprises and cross-border data flows. A new agreement should aim for more realistic purchase commitments, better enforcement mechanisms and expanded areas of negotiation, such as cloud computing and third-country investments.
Despite hurdles, Trump’s reputation as a dealmaker and China’s economic pressures might pave the way for renewed talks, provided both sides are willing to compromise and prioritize durable solutions.
