III. The US Side Has Failed to Meet Its Obligations Under the Phase One Economic and Trade Agreement

Since signing the Phase One Economic and Trade Agreement (hereinafter referred to as the Agreement), the US has systematically escalated economic and other forms of pressure against China, implementing a series of restrictive measures such as export controls and investment restrictions that repudiate the spirit of the Agreement. Concurrently, the US has promoted false narratives related to human rights, Hong Kong, Taiwan, Xinjiang and the pandemic. These actions have done serious damage to China-US ties as well as economic and trade relations, and disrupted normal trade and investment activities, and significantly undermined the conditions necessary for the implementation of the Agreement. 

1. The US Has Failed to Implement Agreement Commitments on Technology Transfer

On technology transfer, the Agreement stipulated, "Neither Party shall require or pressure persons of the other Party to transfer technology to its persons in relation to acquisitions, joint ventures, or other investment transactions." The US adopted the Protecting Americans from Foreign Adversary Controlled Applications Act. Under the pretext of protecting US national security, the US has tried to force TikTok to sell off or divest its business. It has interfered with its normal operation and threatened the technological security and commercial interests of the investors. The US has disregarded and undermined the just and legitimate interests of enterprises and violated the basic principles of the market economy.

At the same time, in the name of protecting national security, the US has released rules to control outbound investment restricting US enterprises from investing abroad, which has obstructed investment cooperation between Chinese and US enterprises in semiconductors and microelectronics, quantum information technology, artificial intelligence (AI), and other fields. In February 2025, the US unveiled a Memorandum on America First Investment Policy and announced that it would adjust its investment policies, with the focus on further limiting two-way investment with China, which will create serious disruption to China-US investment cooperation.

2. The US Has Failed to Fully Implement Agreement Commitments on Trade in Food and Agricultural Products

The Agreement stipulated, "Within 30 days following receipt from China of a formal request for an evaluation of a region of China for avian disease free recognition and a completed information package to support such a request, the USDA's Animal and Plant Health Inspection Service shall initiate such an evaluation." However, the US side has refused to recognize Shandong's status as free from highly pathogenic avian influenza (HPAI), citing non-compliance with its own recognition requirements. On November 2, 2020, China submitted materials to the US to qualify Jiaodong Peninsula as a region free from HPAI. According to Chapter 10.4 of the World Organization for Animal Health (WOAH) Terrestrial Animal Health Code, a country or zone may demonstrate freedom from avian influenza through either immune-based strategies or non-immune measures. By August 2022, China's Shandong Province as a whole had become a region free of HPAI, with all development and management complying with the regulations in the Terrestrial Animal Health Code. Since then, China has conducted continuous monitoring including pathogenic monitoring that can prove that the province has remained free of avian disease.

China has also scrupulously honored the Agreement and recognized the US as avian disease free. It has eased the overall trade ban on US export of poultry and poultry products to China since the Covid-19 outbreak. But the US side has refused to conduct disease-free status certification on the grounds that a HPAI-vaccinated avian influenza free zone is not considered a disease-free zone. This constitutes a failure to reciprocally fulfill the Agreement and is also inconsistent with the WOAH principles regarding avian influenza-free status.

The Agreement stipulated, "The two sides intend to conduct technical consultations with each other on areas of potential cooperation related to pesticides for agricultural use. These consultations may include discussion of the Parties' pesticide registration data and pesticide trial data, and discussion on the setting of maximum residue levels." However, the US side has given no positive response to China's request for cooperation in this field.

China is the largest source of pesticide imports to the US, and the US is China's second-largest export market of pesticides. Realizing mutual recognition of pesticide registration data and pesticide trial data as early as possible will facilitate trade, reduce unnecessary repeated tests, and cut registration costs. It is the shared aspiration of pesticide producers in both countries, and it is favorable to innovation of pesticides in both countries.

China has maintained communication with the US in the hope of starting bilateral technical consultations in relation to pesticides as early as possible. Since December 2020, China has expressed, through the US Embassy in China, its hope that the US side will agree as soon as possible to build a mechanism with the Chinese side for communication and advancing cooperation on pesticides. But the US side has so far not given any reply.

In the Agreement, the US side agreed to complete as early as possible its regulatory notice process for the import of poultry, citrus, jujube, fragrant pear, and other agricultural products from China. However, the US side did not take reciprocal tariff exclusion measures for the agricultural products involved in the Agreement, hindering the substantive export of Chinese agricultural products to the US. Relevant products are not in the tariff exclusion list. In 2025, using the fentanyl issue as the pretext, the US decided to levy an additional 20 percent tariff on all Chinese products to be exported to the US, then a 34 percent "reciprocal tariff", and an additional 50 percent tariff, which would further limit the export of relevant products to the US.

After Chinese aquatic and dairy products for export to the US were detained by the US side, the General Administration of Customs of China has more than once requested the US Food and Drug Administration to clarify as soon as possible how these detainments would cease so that the two sides could advance relevant work. But the US side has not put forward any concrete proposals in response. 

3. The US Has Failed to Fully Implement Agreement Commitments on Financial Services and Exchange Rate Matters

In recent years, the US has generalized the concept of national security and adopted a series of measures to restrict China-related investment and financing, which has caused tension in bilateral economic and trade relations, interrupted normal bilateral cooperation, and seriously impaired the plans of Chinese financial institutions to invest and operate in the US. At the same time, some Chinese financial institutions have faced discriminatory treatment in the US. The US practice is in violation of the rules of fair competition.

According to the Agreement, if the two sides have a dispute over issues related to the exchange rate, the People's Bank of China and the US Department of the Treasury shall seek a resolution under the Bilateral Evaluation and Dispute Resolution Arrangement established through consultations. If they fail to resolve the dispute this way, they may request help from the IMF, consistent with its mandate. These articles provide sensible pathways for resolving disputes.

But after the Agreement was signed, the USDOC laid down new rules that included exchange rate undervaluation in anti-subsidy investigations and introduced "RMB exchange rate undervaluation" in the anti-subsidy cases of some products, which contravenes both WTO rules and the Agreement.

4. The US Has Failed to Provide Adequate Measures to Facilitate China's Efforts to Expand Procurement and Imports

Unjustifiable measures such as export controls and sanctions against China seriously affected the implementation of the Agreement. Since 2020, the US has violated the principles of the Agreement and introduced multiple unreasonable economic and trade restrictions against China, implemented a series of inappropriate export control measures, and repeatedly imposed unjustified sanctions against a large number of Chinese enterprises through the US Entity List. These actions have severely undermined China-US economic and trade relations, resulting in a negative impact on China's imports of goods and services from the US. For example, in October 2022, the US introduced measures to comprehensively upgrade export controls on chips and semiconductors to China. As a result, China's imports of semiconductors and semiconductor manufacturing equipment from the US (denominated in US dollars) decreased by 23 percent and 17.9 percent in that year. The US fabricated the "forced labor" issue and adopted the Uygur Forced Labor Prevention Act, smearing and defaming Chinese enterprises and products, restricting the import of cotton products from China, which indirectly affected Chinese enterprises' imports of cotton from the US.  

Considering the ongoing US efforts to contain and suppress China in recent years, coupled with the detrimental impact of the Covid-19 pandemic on the global economy and trade activities, China would have been justified in withdrawing from the Agreement pursuant to the fourth item of the Article 7.4 by providing written notice to the US. China might also, pursuant to the first item of the Article 7.6, have initiated consultations on the force majeure clause with the US side. However, with the goal of preserving order in China-US ties and China-US economic and trade relations, and safeguarding the vital interests of enterprises and the people in both countries, China has not initiated any actions. Instead, it has demonstrated its sincerity by honoring its commitments and overcoming various difficulties to fulfill the Agreement arrangements. Since the Agreement was signed, the US has not to date initiated any dispute settlement proceedings against China.