Trade Rep Says US Pressing China

Farmers Want Biden Administration to be More Aggressive on Trade, Lower Tariffs

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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U.S. Trade Representative Katherine Tai said Friday the Biden administration continues to have trade discussions with China. (DTN screenshot of live video feed)

LINCOLN, Neb. (DTN) -- With reports that China fell far short of meeting its commitments in the phase-one trade agreement with the U.S. and is growing its influence in the Indo-Pacific, agriculture interests have been calling on the Biden administration to do more on trade.

U.S. Trade Representative Katherine Tai said Friday during a discussion with U.S. Secretary of Agriculture Tom Vilsack at the USDA Ag Outlook Forum that her office continues to press China on meeting its obligations and is making progress in the Indo-Pacific region.

"We will continue our work to press China on the impacts of its policies on our producers, and increasingly focus our conversation around how we can adapt to a world where we very much would like for China to play by our rules," she said.

"But we cannot make decisions for China, and what do we need to do on our own behalf to defend the interests of our economy and our stakeholders and including very much for agricultural stakeholders."

Tai said the relationship with China has grown increasingly more "complex" as the U.S. continues to push the Chinese to meet phase-one obligations. In all, China bought just 57% of the U.S. exports it committed to buying under the phase-one agreement.

"I think it was just in the last couple of weeks that full-year 2021 trade data has come out, and it has confirmed for us what we saw in the trends for 2021, which is that, when you look at the level of commitments on purchases, agricultural and nonagricultural, that the Chinese made to the U.S. government and to U.S. producers, that the performance has been uneven, and that we have shortfalls that we have to contend with," she said. "We have had very direct, honest, respectful conversations with the Chinese for the last couple months since the beginning of October around how can we hold China accountable for these commitments. How do we make good on this agreement?"

When it comes to the war in Ukraine, Tai said as the situation continues to unfold, the USTR hopes to have a better grasp on how the Russian invasion affects agriculture trade.

"Secretary Vilsack, this is an area where I know that we are going to have to work very closely to assess where the impacts are going to be," she said, "especially when it comes to agricultural trade."

Tai said the Ukraine is an "agricultural powerhouse," and the Biden administration would need to "think through" how U.S. trade policies account for foreign policy and domestic economic needs.

INDO-PACIFIC TRADE

China has been racing to make agreements with nations that are part of the Asian Pacific Trade Agreement, including Australia, Brunei Darussalam, Cambodia, Indonesia, Japan, the Republic of Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam.

When it comes to the Indo-Pacific, Tai said the administration is developing an "economic framework" for the region to "deepen our economic relationships" with the countries in the region.

In addition, Tai said trade and other economic agreements with Indo-Pacific countries need to keep in mind several themes, including resilience, sustainability, that certain classes of people aren't "left behind," and U.S. competitiveness.

She said the U.S. needs to continue to push for trading standards that "promote fair and open competition and with respect to our farmers or ranchers or agricultural stakeholders."

Vilsack asked Tai about what the USTR is doing to promote trade other than trade agreements.

"When people outside of the USTR office or our foreign ag service, when they talk about trade, they have a tendency to focus exclusively on trade agreements as if that was the only tool by which to gauge whether or not you are engaged in meaningful discussions," Vilsack said.

Tai said her office has been reaching trade and investment framework agreements, which are used as a forum for the U.S. and other countries to discuss issues of mutual trade interest.

"They're not perfect, shiny objects, but frankly, I think we've got over 40 of them," she said.

FARMERS FOR FREE TRADE

During a Farmers for Free Trade roundtable earlier this week, several producers said they want to see the Biden administration hold China accountable on the phase-one agreement and to involve the U.S. in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Farmers for Free Trade has been calling for the removal of tariffs slapped on China and other countries during the Trump administration to begin to free up trade opportunities.

Broadview, Montana, wheat farmer Michelle Erickson-Jones said the Trump administration trade deal hasn't helped farmers in her state.

"We were concerned about it in 2018, as we were looking into the trade war and the concern for the impacts of retaliatory tariffs, as well as the effects on the marketplace," she said. "I think a lot of those concerns did come to fruition."

A recent report from USDA shows wheat farmers were hit hard by the trade war, losing between $30 million and $50 million annually.

"It's been a couple of rough years for Montana producers, with a combination of significant drought here as well as headwinds for the tariffs and, really unfortunately, a lot of the concerns that we had in 2018 are still concerns for today," Erickson-Jones said.

"We really have not made significant improvements on some of our most difficult markets. China still maintains a lot of nontariff barriers. They still have not fully implemented their tariff-rate quota system. They still have sanitary and phytosanitary regulations that are unfavorable to agriculture. And then when we look around the globe at other opportunities that we have not yet taken advantage of."

FARMERS SOFT TARGETS

Dave Walton, soybean, corn and beef cattle producer from Wilton, Iowa, said tariffs placed on steel and aluminum made U.S. farmers "soft targets" for trade retaliation.

"I live literally 15 miles from the Mississippi River," he said. "So, most of my soybeans are exported. They get loaded on a barge and down to New Orleans and sent overseas. After 2018 when the tariffs were put in place, one of the things we saw is immediate drop in price, and normally it's a supply and demand market. When there's outside forces working on that market, in this case tariffs, we saw that offset, and that went directly to our bottom line. The conversation with the banker for a couple of years was pretty intense."

Walton said his operation has made several changes to adapt since the launch of the trade war. That includes being more aggressive on buying parts and inputs such as herbicides.

"We've actually started looking for alternative markets for our production," he said. "We've switched some to seed beans instead of commodity beans for export just to make sure that we don't get caught again. We've gone to processing more of our own beef locally, as opposed to some of the plants that exported that beef."

Lafayette, Indiana, soybean farmer Brent Bible said he's concerned about the loss of soybean markets to Argentina and Brazil that came because of tariffs.

During the past five years, the number of soybean acres planted in the U.S. has remained relatively unchanged.

"Brazil, in 2017 versus today, they will plant this year about 14 million more acres to soybeans than what they did in 2017," Bible said.

"So, they are continuing to increase their output, they're continuing to increase their market share. And they've been able to do that in part because of the retaliatory tariffs that were in place and the benefit that gave to their price structure."

TRADE DE-ESCALATION

Ed Gresser, president and director for Trade and Global Markets at the Progressive Policy Institute, said the Biden administration should be working to "de-escalate" the trade war with China. That could be accomplished, he said, by drawing back on tariffs.

"We were paying about $36 billion a year in 2017" in tariffs, he said. "And now, people in the U.S. are paying $85 billion a year for tariffs. It's quite a lot, altogether about $120 billion in extra tariffs by the United States before you even get to the retaliation."

Gresser said the retaliation against the U.S. was "quite intense," coming from the European Union, Mexico, Canada, China, Turkey and India. More than half of U.S. agriculture exports are exposed to tariff retaliation.

Iowa Republican Sen. Joni Ernst said during the Farmers for Free Trade event that the Biden administration needs to step up its trade efforts.

"It's no secret that China is taking serious steps to expand their foothold in the Indo-Pacific region, and that's why we really need this administration to take action and we need it now," she said.

Ernst said the U.S. needs to act and "make sure that China doesn't take the lead" in that region.

"This is especially important given China's failure to live up to its end of the phase-one China deal," she said.

"Unfortunately, the administration has failed to hold China accountable, and they've shown a real reluctance to forcefully engage on free trade."

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley

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