Title

Sino-American Trade War: Self-enforcing Contracts and Phase One Agreements

Student Type

Graduate

University

Old Dominion University

Country

United States

Document Type

Conference Paper

Description/Abstract

Sino-American bilateral trade relations have increased significantly in the past 4 decades after China started its economic reforms. The bilateral expansion in trade has been accompanied by an increase in complexity and tensions too, which emerged in the form of U.S.-China Trade War after President Trump came to power. After series of tit-for-tat tariff increases, in an attempt to address concerns through negotiations, both sides reached to Phase One Agreement to be followed by other phases. However, the commitments made in the agreement were not met. In my thesis, I use “self-enforcing contracts” theory to analyze phase one agreement. The examination indicates that Phase One Agreement lacked components of self-enforcing contracts, providing players with other profitable strategies to deviate to. The thesis proposes strategies for a self-enforcing Phase Two Agreement, which would ensure parties’ compliance to the agreement and long-term gains.

Keywords

U.S.-China relation, Trade war, Game theory, Contract enforcement

Disciplines

International and Area Studies

Session Title

Insight Into US-China Relations

Location

Webb Center, Isle of Wight Room

Start Date

February 2023

End Date

February 2023

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COinS
 
Feb 10th, 10:30 AM Feb 10th, 11:30 AM

Sino-American Trade War: Self-enforcing Contracts and Phase One Agreements

Webb Center, Isle of Wight Room

Sino-American bilateral trade relations have increased significantly in the past 4 decades after China started its economic reforms. The bilateral expansion in trade has been accompanied by an increase in complexity and tensions too, which emerged in the form of U.S.-China Trade War after President Trump came to power. After series of tit-for-tat tariff increases, in an attempt to address concerns through negotiations, both sides reached to Phase One Agreement to be followed by other phases. However, the commitments made in the agreement were not met. In my thesis, I use “self-enforcing contracts” theory to analyze phase one agreement. The examination indicates that Phase One Agreement lacked components of self-enforcing contracts, providing players with other profitable strategies to deviate to. The thesis proposes strategies for a self-enforcing Phase Two Agreement, which would ensure parties’ compliance to the agreement and long-term gains.