Phase One Down


By Kayla Sargent

“As incomes rise in China, demand for protein in diets increases as well.  Chinese demand for imported beef, pork and poultry is growing at a rapid rate, made more acute due to domestic pork supply constraints in China as a result of the ongoing outbreak of African swine fever.”

This growing demand, as stated in a fact sheet distributed by the Office of the United States Trade Representative (USTR) and USDA, presents an opportunity for American ag producers, but has also been a source of frustration as an ongoing trade war of tit-for-tat tariffs between the U.S. and China and hinders the export market.

On January 15, American agriculture organizations took a big sigh of relief and offered celebratory praise when the Phase One Agreement was signed by President Donald Trump and Chinese Vice Premier Liu He.

“One of the greatest trade deals ever made,” President Trump tweeted the next day.  “Also good for China and our long-term relationship.  Two-hundred-fifty billion dollars will be coming back to our country and we are now in a great position for a Phase Two start.  There has never been anything like this in U.S. history.”

The deal promises increased agricultural exports to China and removal of certain non-tariff barriers to the market, according to the USTR.  It also addresses intellectual property, technology transfer, financial services, and currency and foreign exchange.  Further, according to the USTR, “the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.”

Specifically, as part of the Phase One Agreement, China has agreed to purchase and import, on average, “at least $40 billion of U.S. food, agricultural, and seafood products annually for a total of at least $80 billion over the next two years,” according to the USTR.  Of that, USTR and USDA predict that pork exports will reach $1.7 billion annually; beef and beef products could hit $1 billion; and poultry exports up to at least $1 billion per year.

A National Farmers Union (NFU) press release said, “though China has confirmed that it will increase its agricultural purchases, it has not publicly committed to a specific dollar amount, nor has it indicated which products it plans to buy.”

Beyond purchases, Phase One addresses many non-tariff barriers that have hindered agricultural trade in the past.  According to USTR, “China’s overly restrictive and burdensome import requirements have hampered the ability of U.S. farmers to compete on a level playing field.”

In terms of food safety, China agreed to not implement regulations that are not science or risk-based.  Food safety regulations are to only apply “to the extent necessary to protect human life or health.”  China also agreed to a transparent, efficient, science- and risk-based process for the evaluation and authorization of agricultural biotechnology.

“For the U.S. pork and beef industries to expand their business in China, the world’s largest and fastest-growing destination for imported red meat, it is critically important that China follows international standards for pork and beef trade. The Phase One trade agreement lays important groundwork toward this goal,” United States Meat Export Federation President and CEO Dan Halstrom said.

For beef, that means the removal of age restrictions after completion of a risk assessment; expansion of allowable products; recognition of the U.S. beef traceability system; and adoption of internationally accepted maximum residue levels for three commonly used drugs.  The product scope of allowable pork products is also set to increase.

“For many years, Chinese consumers have been denied access to high-quality U.S. beef – the same U.S. beef we feed to our families,” National Cattlemen’s Beef Assocation President Jennifer Houston said.  “Non-scientific trade barriers like the ban on production technologies, the extensive traceability requirements, and the 30-month BSE restriction have greatly limited our ability to tap into growing beef demand in China.  The removal of these massive trade barriers gives Chinese consumers access to the U.S. beef they desire, and it gives America’s cattlemen and cattlewomen the opportunity to provide U.S. beef to a growing consumer-base that represents one-fifth of the global population and a middle-class that is greater than the entire U.S. population.”

Houston, who joined President Trump at the Phase One signing ceremony, expressed her organization’s gratitude for President Trump, the administration, and the negotiators for their “hard work and dedication.”  She called it a “great day for the U.S. beef industry” and said U.S. cattle producers and Chinese consumers “will have a stronger relationship that will benefit both countries for generations to come.”

American Farm Bureau Federation President Zippy Duvall said the deal was “welcome news.”  Duvall pointed out that China used to be the largest market for U.S. agricultural goods, but since retaliatory tariffs took effect, it has dropped to the fifth largest.  Duvall said the agreement could help “turn around two years of declining agricultural exports.”

NFU only offered “cautious” optimism upon signing of the Phase One Agreement.  Since the terms of the deal are “largely unclear,” NFU “continues to be apprehensive.”  NFU noted that the progress “comes as a relief” nevertheless.

“After so many months of uncertainty and escalating tensions, it is a good sign that our two countries appear to have found common ground,” NFU President Roger Johnson said.  “But given the numerous deals that have been reached and then breached in the past two years, we are also skeptical.  And without more concrete details, we are deeply concerned that all of this pain may not have been worth it.  Not only has this trade war cost farmers billions of dollars’ worth of sales to China, but it has also bruised our reputation, making other trading partners reluctant to work with us.

“To justify these lasting damages, this deal must deliver more than vague, unenforceable, short-term commitments – we need real and lasting behavioral change from China, and we need reliable and robust agricultural export markets.  That is the standard the Trump administration should be aiming for as it negotiates the next phase of this agreement.”

BACK

For full access subscribe today for just $15!

Sign Up!

© 2017 Western Ag Reporter. dba: Western Livestock Reporter | All Rights Reserved.

Website Design by EDJE  |