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“Welcome thaw” for Asia-Pacific airlines

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February 1st 2020

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For airlines in the Asia-Pacific, the signing of a “Phase One” trade deal last month between the U. S. and China after two years of a tit-for-tat tariff war comes as welcome relief. Read More » The dispute caused airlines a great deal of harm, unsettled global economies, dented business confidence and, in particular, produced a serious decline in a critical sector of operations for the region’s airlines, air freight.

Under the agreement, China has committed to purchase US$200 billion more in U.S. goods over the next two years than it did in 2017 – when the trade war erupted - including about $78 billion in manufactured goods such as aircraft.

If all goes to plan that should give the air cargo business some lift. It also commits China to a crackdown on intellectual property theft, which is regarded as a major problem for U.S. companies operating in China.

China will submit an “Action plan to strengthen intellectual property protection” within 30 days of the agreement taking effect. The proposal would include “measures that China will take to implement its obligations” and “the date by which each measure will go into effect”.

Phase One keeps in place the bulk of the tariffs U.S. president, Donald Trump, has placed on $360 billion of Chinese goods and also maintains the threat of additional punishment if Beijing breaches the terms of the deal.

For the time being, the tone between the two countries is conciliatory. In a message conveyed to president Trump, China’s leader, Xi Jinping, said the deal was “beneficial to China, the U.S. and the world”.

It showed the two countries, “based on equality and mutual respect, through dialogue and consultations”, can find proper and effective solutions to problems, China said.

The risk is unpredictable Trump. If he wins the U.S. presidential election in November, the emboldened leader could revert to a tougher stance on both trade and tariffs with China, especially if the U.S. suspected the Mainland was not living up to its part of the tariff deal.

Associate editor and chief correspondent
Orient Aviation Media Group

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