Ag Policy Blog

Officials Highlight Chinese Trade Actions

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A Chinese-flagged ship at the Long Beach Port in southern California. Officials are counting on higher agricultural exports to China under the phase-one deal. That has not been reflected in futures prices so far. (DTN file photo)

Trump administration officials on Tuesday detailed some of the actions China has taken to implement a trade deal with China, which includes excluding and reducing tariffs on certain agricultural products.

Prices for some major crops, including corn and soybeans, have not rallied since President Trump signed the phase-one trade deal with China on Jan. 15. USDA last week also did not increase exports significantly from a year ago with USDA forecasting a $4 billion increase from 2019 to $139 billion.

The phase one deal calls for China to buy an average of $40 billion in U.S. agricultural products over each of the next two years. The deal uses a baseline of $24 billion from 2017, then projected a target of $36.5 billion for 2020, and $43.5 billion for 2021.

Economists at the U.S. Agricultural Outlook Forum last week highlighted China's economy could be impacted because of the coronavirus outbreak.

The phase-one agreement went into force on Feb. 14. Since that time, USDA and the U.S. Trade Representative's Office highlighted some of the actions taken by China to achieve its agricultural commitments.

At the moment, prices for commodities such as corn and soybean futures have not gained traction. Since the trade deal was signed in mid-January, the futures price for December corn has fallen 20 cents to $3.82 on Tuesday. The November soybean contract has dropped 48 cents to $9.10 a bushel. The February average close of those contracts at the end of Friday will set the crop insurance guarantees for those two crops. As of Tuesday, that average stood at $3.90 for corn and $9.18 for soybeans.

President Donald Trump on Friday suggested in a tweet that farmers could receive another year of trade aid. Afterward, Agriculture Secretary Sonny Perdue in a statement has tried to tamp down those expectations and encourage farmers to focus on the market.

“I hope we can show that a third round [of trade war payments] is not needed for 2020,” Perdue said in a statement. “We still believe farmers want trade rather than aid. China announced in early February that the country had adjusting tariffs on U.S. agricultural products. Last week, Chinese officials also announced there was a process for businesses to apply for exclusion of tariffs on U.S. agricultural products as well.

The news release also noted China had:

-Lifted the ban on imports of U.S. poultry and poultry products.

-Signed a protocol allowing importation of fresh chipping potatoes from the U.S.

-Lifted restrictions on import of U.S. pet foods containing ruminant material.

-Updated lists of facilities approved for exporting animal protein, pet food, dairy products, infant formula and tallow for industrial use.

-Updated the list of approved U.S. seafood products that can be exported to China.

Perdue praised the president and the administration for negotiating "a strong trade agreement with China that promises significant benefits for American agriculture. We look forward to realizing these benefits this year and are encouraged by progress made last week. We fully expect compliance with all elements of the deal."

U.S. Trade Ambassador Robert Lighthizer said the trade agreement was already showing positive results. "Under the President’s leadership, we will ensure the agreement is strictly enforced for the benefit of our workers, farmers, ranchers and businesses."

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