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Tech trade groups welcome 1st phase of trade deal but urge strict enforcement

Trade groups across the tech, media and telecom sectors lauded the "phase one" signing of a trade deal between the U.S. and China, though they urged robust enforcement and further relaxation of tariffs.

The agreement was signed Jan. 15. It includes commitments from China to purchase at least $200 billion in goods and services; to end a requirement that foreign companies transfer technology to Chinese companies to get market access; and to address intellectual property concerns related to trade secrets, according to the White House.

In return, the U.S. has agreed to halt certain tariffs on $160 billion of Chinese goods. However, duties still remain on billions of dollars worth of trade between the two economies. Complex issues, such as subsidies and state-owned enterprises, are likely to be addressed in the second phase, S&P Global Market Intelligence previously reported.

There is no clear time frame for the second phase.

Gary Shapiro, president and CEO of the Consumer Technology Association, a trade association representing the U.S. consumer technology industry, said in a statement that the agreement is "a big step toward normalizing our trading relationship with China and ending this costly trade war."

However, Shapiro warned that "market uncertainty remains until we see permanent tariff removal — or return the billions of dollars our nation has paid because of these tariffs."

The U.S. has thus far retained 25% tariffs on $250 billion of Chinese goods as well as 7.5% tariffs on approximately $20 billion of separate products. U.S. President Donald Trump has said these tariffs provide the U.S. with leverage in future negotiations. "They will come off as soon as we finish phase two," Trump said Jan. 15.

CompTIA, an information technology industry trade group, also applauded the signing of the deal, calling the provisions on forced technology transfers and intellectual property protections "key."

However, the trade group emphasized that work remains to be done, both in terms of backing up the phase one agreement with real and effective enforcement mechanisms, as well as in drafting phase two.

"As part of Phase Two, we urge the Administration to ensure that China allows for cross-border data transfers, provides full and non-discriminatory market access on cloud and telecommunication services, and terminates prohibitive trade subsidies. Absent the inclusion of these provisions, any deal will fail to produce real and systemic progress in our relationship with China," said Cinnamon Rogers, executive vice president of advocacy at CompTIA, in a statement.

The group noted that China is the third largest recipient of U.S. tech exports.

The Internet Association — a trade group representing edge providers such as Facebook Inc., Alphabet Inc.'s Google LLC and Amazon.com Inc. — also cautiously welcomed the deal.

"This deal will help to limit market access barriers for American internet companies and better protect innovative U.S. intellectual property," said Jordan Haas, director of trade policy for the group, in a statement. "We hope this agreement will ultimately result in the easing of harmful tariffs while creating enforceable rules around cyber intrusions, forced technology transfers, and other aspects of China's intellectual property policy."

The 96-page agreement covers nine chapters, the first and longest of those being the one on intellectual property. The chapter addresses the handling of trade secrets, patents and pharmaceutical-related IP, trademarks and enforcement against pirated and counterfeit goods. The U.S. and China also agreed to address issues such as the unauthorized recording of theatrical films and copyright protection for sporting event broadcasts in future negotiations.