Washington Insider-- Tuesday

US-China Trade Dialogue

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

USDA to Lead Trade Mission to Sub-Saharan Africa

Deputy Agriculture Secretary Krysta Harden will lead a trade mission in mid-November to expand export markets for US agriculture in sub-Saharan Africa. Harden and leaders from food and agriculture companies, organizations, and departments of agriculture at the state level on Nov. 17-20 will meet with potential customers from more than a dozen countries across the region to learn about business conditions and develop strategies for expanding sales.

“With a strong economic outlook, a growing middle class, and surging demand for consumer-oriented foods, sub-Saharan Africa is one of the fastest-growing regions for US agricultural exports,” Harden said in a statement.

Over the last decade, US agricultural exports to countries like Angola, Ethiopia, Ghana, Kenya, Nigeria and South Africa have grown by more than 50%, totaling $2.3 billion last year, according to the USDA. Nigeria is the third-largest importer of US wheat and Angola is the fourth-largest market for poultry meat. Ghana is among the top 10 importers of US rice.

Harden also said demand for consumer-oriented products also grew by nearly 90% in five years, from $480 million in 2010 to $909 million in 2014. Last year, the US shipped record levels of poultry meat, prepared foods, sauces, processed vegetables, wine, beer and tree nuts to sub-Saharan Africa.


USDA Announces Fall Bird Flu Planning & Preparation Report

A report on planning and preparations for highly pathogenic avian influenza (HPAI) in advance of a potential recurrence of the disease when birds migrate south this fall has been released by USDA’s Animal and Plant Health Inspection Service (APHIS). The report should address a request for the plan made last week to USDA from the Senate Ag Committee.

The bird flu outbreak that devastated poultry producers during the winter and spring of 2015 was the worst animal disease in US history. It affected more than 48.8 million birds and 21 States before the final detection on June 17. The incredible scope of this outbreak presented many challenges to Federal, state and industry resources and clearly identified areas where greater coordination, preparation and communication were needed. While response operations continue in the Midwest, APHIS and its partners have used the time since the last positive detection to plan for the return of the disease, using a hypothetical worst case scenario in an effort to prepare.

“APHIS’ planning activities incorporated our experience from this year’s response effort, our epidemiologic studies, and extensive feedback and input gathered from State partners, industry, academia and other stakeholders,” the agency said. The Fall 2015 HPAI Influenza Preparedness and Response Plan captures the results of this planning effort, organizing information on preparatory activities, policy decisions and updated strategy documents into four key areas:

1. Preventing or reducing future outbreaks;

2. Enhancing preparedness;

3. Improving and streamlining response capabilities; and,

4. Preparing for the potential use of AI vaccines.

The report includes an updated biosecurity self-assessment for the poultry industry, streamlined and updated procedures for providing indemnity and other payments, a draft vaccine use strategy and many other items of interest to the Agency’s stakeholders.

The report sums up the activities that the agency plans to implement in the event that the virus makes a return this fall. However, the plan likely will need to be kept alive over the winter months as there are some experts who believe that the risk may be even greater when the spring migration northward takes place in the spring, the timeline when the US outbreak reached its zenith this year.


Washington Insider: US-China Trade Dialogue

In what seems to be a “determined show of openness” ahead of the coming visit to the United States by China’s President Xi Jinping, Zhang Xiangchen, China’s deputy representative for international trade, recently granted an interview to the Washington Post on the nature of US-China trade relations. The message was, primarily, that China values these and sees them as a kind of political “ballast” that keeps things “sailing forward smoothly.” He also frankly pointed to some “irritants” on the US side during the interview.

He noted that the press focuses on dramatic issues such as the South China Sea, cybertheft and the devaluation of the yuan in the lead-up to the visit, but he prefers to emphasize a “long view,” and argues that ties are much better now than they used to be a decade or more ago.

With Xi coming to Seattle, the District, and New York over the next two weeks, Zhang said we can expect positive steps, including progress on state-province economic ties, cooperation on overseas development assistance and talk on a bilateral investment treaty, a potentially landmark agreement that would provide clearer rules for foreign investment.

Zhang declined to comment on when such a deal might be made, noting only that China’s entrance to the World Trade Organization took 15 years and that this treaty is “no less important or complex.”

The Post notes that Zhang was careful to emphasize “positive progress.” At the same time, he emphasized that when it comes to commercial ties between the world’s two largest economies, there are legitimate concerns on both sides. He often tells US colleagues that “good is not perfect,” he said.

The Post suggests that most US businesses in China would agree that there are imperfections and argue that their success in the huge Chinese market is often undercut by policies that give local companies an advantage, whether by restricting foreign investment, subsidizing local firms or selective targeting in periodic compliance crackdowns.

Zhang took pains to note that China’s top leaders are vowing to let the market play a “decisive” role in the years ahead as part of their plan to “comprehensively deepen” economic reform. But that language is seen as vague by the US.-China Business Council and others who are skeptical about how much China will actually loosen its economic grip, especially following this summer’s stock crisis and the aggressive state intervention that occurred then.

Zhang noted that he spends a great deal of time listening to the concerns of the US business community, both through reports by the US Chamber of Commerce or the USCBC or by meeting with businesspeople.

He also raised China’s own list of worries, including questions of transparency, reasonableness of regulation and intellectual-property protection. He notes these are issues that China is encountering in the process of its liberalization and opening up, and “I also see that the concerns of [those] businesses are reasonable,” he said.

“It’s our job to promote the improvement of China’s investment environment,” he continued. “And we believe that the Chinese government is a pro-business government, and the Chinese government welcomes foreign investment.”

Other major areas of concern for US businesses are China’s new laws on national security and nongovernmental organizations. Zhang called the concerns “reasonable” but overblown and reflect a “lack of understanding.”

Asked about the concerns of Chinese investors and people in business in the United States, Zhang focused on how national security reviews in the United States have affected Chinese firms such as Huawei, one of the world’s biggest makers of telecommunication equipment. The Chinese firm hoped to expand into the United States, but it faced strong opposition and in 2012, a year-long House Intelligence Committee investigation into the company found that it was a threat to national security, a move Zhang dismissed the as hypocrisy. US firms in China are sometimes led by former ex-military types, he said. So Ren’s PLA links are “irrelevant.”

Nevertheless, the Chinese government’s interventions in the operation of its large state owned firms remain a key US concern, one that requires continued pressure from the Western trading partners, especially the United States. It does seem true, as Zhang says, that the US-China relationship is stronger than it was a couple of decades ago but it also is true that it needs careful nurturing and vigilance regarding the future, Washington Insider believes.

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