Law360 Quotes Stephen Kho and Clete Willems on “Phase One” Trade Deal

Law360 has quoted Akin Gump public law and policy partner Clete Willems and international trade partner Stephen Kho in the article “What To Look For In The US-China “Phase One” Trade Deal,” which reports on the preliminary trade agreement the United States and China will sign this week. The deal was reached last month.

As the article notes, the Trump administration had used tariffs as a means of forcing China to the negotiating table. If the agreement allows for any re-escalation of tariffs, Law360 says it will raise questions about the utility of the agreement overall.

Willems said he will be eager to see if the enforcement mechanism is built to handle a high volume of trade fights. “The concern is not rigor, it’s durability,” he said. “If this thing is utilized on multiple occasions, does there come a point where the other party continually retaliates in kind or pulls out of the agreement altogether? That is going to be a political test and a political question, and it’s an open one.”

The article also notes that China’s “insufficient protection” for foreign intellectual property, as well as Beijing’s insistence that companies turn over sensitive technology as a condition of doing business, were the impetus for the standoff between the two countries.

Kho said the agreement may “be good on substance, but there are always issues on what the national government says and how it trickles down into the provinces and localities. How is that going to work?”

The deal also contains a chapter addressing financial services, and Willems observed that there is an expectation that the phase-one deal will address the rules pertaining to joint venture requirements and limits on controlling ownership, though he noted that the deal should also require China to issue licenses to those companies on an equitable basis.

“The big fear is that China gets rid of the equity caps, but then they don’t grant any of the licenses. It’s going to be important to make sure that there are provisions that say there’s going to be a real avenue for U.S. firms to obtain those licenses,” Willems said.