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U.S.-China trade deal 'hiatus' rather than resolution: report

All Headlines 08:00 January 18, 2020

SEOUL, Jan. 18 (Yonhap) -- The so-called "Phase One" trade deal between the United States and China will have a positive but limited impact on global trade because it is more of a ceasefire than resolution of the conflict, according to global credit rating agency S&P on Saturday.

"The signing of 'Phase One' of a U.S.-China trade deal is mildly positive for global trade, GDP growth, and credit in that it marks a de-escalation in tariffs and other restrictions," S&P Global Ratings said in a report published shortly after Washington and Beijing signed the initial trade deal on Wednesday (Washington time).

The photo, taken Jan. 1, 2020, shows rows of export containers waiting to be loaded onto ships at South Korea's largest seaport in Busan, 450 kilometers south of Seoul. South Korea reported a 10.3 percent on-year drop in exports in 2019, the largest on-year decline since 2009. (Yonhap)

The agreement was widely expected to lead to a recovery in global trade by putting an end to the prolonged Sino-Americano trade conflict, which has been partly blamed for a large, steady drop in South Korean exports.

South Korea's exports in 2019 fell 10.3 percent from a year earlier to US$542.4 billion, with shipments slipping for 13 consecutive months since December 2018.

The United States and China are the largest importers of South Korean goods and services.

S&P insisted the U.S.-China trade deal was simply a statement that would have little or no direct effect.

"From a macroeconomic perspective, S&P Global Ratings continues to believe the secondary effects of the tariff dispute -- and, now, the steps being taken to resolve it -- on the economy and borrowers we rate are more material than the near-term direct effects," it said.

Under the deal, China agreed to enhance its protection of intellectual property rights and market access and to import an additional $200 billion worth of American goods.

"However, the agreement on IP and market access is open to interpretation, and existing tariffs imposed by both countries remain largely unchanged," S&P noted.

"The chance that negotiations for a final agreement will stall, or enforcement of the Phase One deal doesn't materialize, continue to cast uncertainties over corporate supply-chain strategies," it added.

bdk@yna.co.kr
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