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Ag groups applaud U.S., China trade deal signature
Despite the ag markets reacting mostly negatively to the signing of the much anticipated Phase One trade deal between the U.S. and China Wednesday, ag commodity groups poured out their positive responses to President Donald Trump.
The Phase One trade deal requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange, according to the USDA.
“The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement. The U.S. has agreed to modify its Section 301 tariff actions in a significant way,” the USDA stated following the signing.
According to documents released by the White House outlining details of the deal, China’s imports of U.S. agricultural products, “such as soybeans, cotton, grains, meats, ethanol, seafood, and the full range of other agricultural products,” will total at least $80 billion over the next two years.
U.S. Secretary Perdue sees this agreement as proof that President Trump’s negotiating strategy is working.
“While it took China a long time to realize President Trump was serious, this China Phase One deal is a huge success for the entire economy. This agreement finally levels the playing field for U.S. agriculture and will be a bonanza for America’s farmers, ranchers, and producers,” said Secretary Perdue. “China has not played by the rules for too long, and I thank President Trump for standing up to their unfair trading practices and for putting America first. We look forward to exporting to Chinese customers hungry for American products.”
The soybean industry applauds the administration and is hopeful the agreement will lead to additional measures that restore open trade between the two countries, including a negotiated solution in the next phase that removes tariffs on American soybeans shipped to China.
“We have long supported changes to how China conducts business with the world, in agriculture and other industries. Today’s signing addresses many of those concerns and is a positive for the U.S., including reduction of non-tariff barriers to trade that are important to soybean growers and other agriculture groups,” said Bill Gordon, soy farmer from Worthington, Minnesota, and ASA president.
Gordon addedd, “Yet, as an industry, we have a lingering unease regarding the tariff on U.S. beans, which was not addressed in this deal. China needs to take action, and, as a goodwill gesture, offer to remove its retaliatory tax on our soybeans.”
U.S. Grains Council Chairman Darren Armstrong, a farmer from North Carolina, says that the signing of U.S.-China Phase One agreement should reduce continued market uncertainty.
“And it (the deal) should incentivize China to purchase significant amounts of the full range of U.S. agricultural products, including grains, distillers’ dried grains with solubles (DDGS) and ethanol, to total at least $80 billion over the next two years,” Armstrong says.
U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) are very encouraged by the signing.
Chinese imports of U.S. soft white (SW), hard red spring (HRS), and hard red winter (HRW) wheat classes were trending up before abruptly ending when China implemented retaliatory tariffs on U.S. wheat and other agricultural commodities in March 2018, according to a USW press release Wednesday.
“Even though China has huge domestic wheat stocks, they were buying more U.S. wheat because they needed it to meet growing demand for higher quality wheat foods,” said Vince Peterson, president of U.S. Wheat Associates (USW), the organization funded by farmers and the U.S. government to promote wheat exports. “The losses we demonstrated soon after China stopped importing U.S. wheat have only grown since then, so we hope the agreement signed today signals a potential turn-around.”
Adding to the optimism is China’s separate agreement to work toward filling its 9.6 million metric ton (MMT) reduced tariff rate quota (TRQ) for wheat imports, the USW press release stated.
Mike Steenhoek, executive director at Soy Transportation Coalition, says that today’s signing of a phase one agreement with China provides farmers some optimism.
“In the midst of all the commentary regarding the Phase One agreement, I think it is very essential to underscore the importance of predictability and reliability as the U.S. and China trading relationship proceeds. As details continue to emerge regarding the Phase One deal, many of us will be particularly attentive to not just expected volumes of soybeans and agricultural products to be exported to China, but, just as important, the predictability and reliability of those volumes. We appreciate the efforts of the Trump administration to emphasize this in any agreement between the two countries,” Steenhoek stated in a press release.
Steenhoek added, “When it comes to trade policy, I would rather it be predictably good than sporadically great.”