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Thursday, January 16, 2020

In new trade deal, China keeps tariffs on U.S. farm goods but promises to buy more over next two years

Chinese and U.S. officials signed the first phase of several planned trade resolutions Wednesday at the White House. The agreement has more than 50 agriculture-related commitments, including a faster approval process for biotech crops and tariff exclusions for many U.S. commodities.

"The pledged changes will remove obstacles for U.S. ag exports from beef, pork, poultry and seafood to avocados, blueberries, pet food and hay," Ryan McCrimmon of Politico's Morning Agriculture reports. "China won’t lift any of its retaliatory duties on American farm goods, which total $110 billion, but the new tariff exclusions will facilitate an uptick in agricultural purchases from U.S. producers."

China promised to buy about $40 billion in U.S. farm products this year and next year, contingent on market conditions. "Beijing had balked at committing to buy set amounts of U.S. farm goods earlier, and has inked new soybean contracts with Brazil since the trade war started," Ryan Woo and Jeff Mason report for Reuters. "Although the deal could be a boost to U.S. farmers, automakers and heavy equipment manufacturers, some analysts question China’s ability to replace imports from other trading partners with more shipments from the United States."

Another possible issue: if China reneges on its promises, the deal allows the U.S. to again put tariffs on Chinese goods. "But according to the text, if the offending party disagrees with such a result, its only recourse is to quit the agreement. There are no provisions for appeal or levying retaliatory tariffs," David Lawder reports for Reuters. "Trump administration officials insist that they have set up a robust process for resolving disputes, with each country opening an enforcement office to field and review complaints about compliance. Those grievances will be aired through a series of consultations with escalating levels of officials over a roughly 90-day period before penalties can be levied."

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