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U.S. to press China on phase one trade agreement, USDA Secretary says

The Asian giant continues to be the No. 1 customer of U.S. ag exports.

This year’s record of U.S. agricultural exports could be broken next year, as the U.S. expects to keep China’s feet to the fire on existing trade agreements, according to USDA Secretary Tom Vilsack.

The USDA leader made a virtual appearance at the Ag Outlook Forum Monday.

After polling attendees on their top farm policy concerns, leaders of the forum announced that taxes, trade, labor, and regulations were the issues that floated to the top.

The FY 2021 forecast of $173.5 billion is $33.8 billion, or 24%, higher than the FY 2020 final total and nearly $17 billion above the previous record set in FY 2014, according to the USDA’s August forecast. Factors underpinning the increase include record volume and value of corn exports, record volume of soybean exports, strong demand from China, and reduced foreign competition.

Looking ahead to FY 2022, U.S. farm and food exports are projected at a record $177.5 billion, topping 2021’s forecasted level by $4 billion, according to the USDA’s August forecast.

With trade being a popular concern, Secretary Vilsack took the opportunity to stress that the key to accomplishing the U.S. export goals is a strong relationship with China. 

The Asian giant continues to be the No. 1 customer of U.S. ag exports.

China is the United States’ No. 1 customer, with U.S. exports forecast at $39 billion, eclipsing the previous record of $29.6 billion set in FY 2014, according to USDA data.
Agricultural exports to Canada and Mexico are forecast at $23.8 billion and $22.3 billion, respectively.

This growth is led by Chinese demand for soybeans and corn. Other top markets, in order, are Canada, Mexico, Japan, the European Union, and South Korea, with demand remaining strong across the board.

Under the 2020 phase one deal, China agreed to buy at least $200 billion more in U.S. goods and services over two years — in 2020 and 2021 — on top of its purchases in 2017.

“While we recognize that China has increased its purchases over the last several years, due to the phase one trade agreement, it has not met the requirements of phase one,” Secretary Vilsack says.

“It’s expected that we will continue to press China for meeting their promised levels of sales and transactions. It’s our expectation and it should be its (China’s) expectation that they live up to the agreements that they made.” With China, it’s an incredibly complex relationship, Vilsack explains.

While it’s easy for anyone in a particular industry, whether agriculture or other industry, to look at the trade relationship with just their own interest, the reality is that the relationship has multiple levels.

For example, the U.S. and China negotiate on a national security level, a climate security level, trade level, economic competition level, and a global leadership level, the USDA leader says.

“It’s important to press China on the Phase 1 trade deal and for us to keep in mind that the relationship is complex,” Secretary Vilsack says. And, while there may be differences on one side of the relationship, there are opportunities on the other side that need to be taken fully advantage of.”

Adding Export Customers

The U.S. will continue to reach out to more countries, regarding adding more export markets.

In his address Monday, Secretary Vilsack outlined plans to reach out to Canada’s ag leaders on the implementation and enforcement of the U.S., Mexico, and Canada (USMCA) trade agreement. 

“It’s a new trade model. But, let’s see if it works. If it works, then it can be applied to the conversations with other individual countries or multilateral nations,” the USDA leader says. Also, Mexico is close to finalizing its access to U.S. potatoes. 

Recently, Vietnam loosened its requirements on trade with U.S. ag products.

Secretary Vilsack noted that the European Union is allowing the U.S. more time to finalize health certificates for livestock.

“We are deeply concerned that this issue could impact about $1.5 billion worth of livestock sales to the EU. We continue to work with the EU to make sure the health certificates are doable and practical,” Secretary Vilsack says. 

Secretary Vilsack sees trade relationships in Southeast Asia and Africa as important, long term.

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