China has started making policy changes and announcing tariff exclusions for imports of U.S. agricultural products as part of its commitments under the “Phase One” trade agreement with the United States, the Trump administration said in an update issued Feb. 25.
Secretary of Agriculture Sonny Perdue and U.S. Trade Representative Robert Lighthizer issued a joint statement outlining ways China has begun implementing its agriculture-related commitments under the agreement, which entered into force on Feb. 14.
Perdue and Lighthizer said China has taken the following actions:
- Lifting the ban on imports of U.S. poultry and poultry products, including pet food containing poultry products (Poultry and Poultry Products Announcement);
- Lifting restrictions on imports of U.S. pet food containing ruminant material (Pet Food with Ruminant Ingredients Announcement);
- Updating lists of facilities approved for exporting animal protein, pet food, dairy, infant formula, and tallow for industry use to China;
- Updating the lists of products that can be exported to China as feed additives;
- Updating an approved list of S. seafood species that can be exported to China; and
- Signing a protocol that allows the importation of U.S. fresh chipping potatoes (S. Chipping Potatoes Protocol Announcement);
In addition, they said China has begun announcing tariff exclusions for imports of U.S. agricultural products subject to its retaliatory tariffs (Tariff Exclusion Process Announcement), and it announced a reduction in retaliatory tariff rates on certain U.S. agricultural goods (Tariff Rate Adjustment Announcement). In addition, the NGFA has been informed by high-level USDA officials that periodic telephone conversations have occurred between various U.S. and Chinese officials on sanitary and phytosanitary provisions contained in the trade agreement.
“We look forward to realizing these benefits this year and are encouraged by progress made last week,” Perdue said. “We fully expect compliance with all elements of the deal.”
Meanwhile, on Capitol Hill the House Ways and Means Committee conducted a Feb. 26 hearing on U.S.-China trade, during which Tim Dufault, owner/operator of Dufault Farm in Crookston, Minn., said the tariff dispute that preceded the Phase One deal “has created a vicious cycle on farms like mine” when it comes to lack of market opportunities and reliance on USDA’s Market Facilitation Program (MFP) payments. He also echoed concerns expressed by Committee Chairman Richard Neal, D-Mass., in his opening statement regarding China’s ability to meet its obligations under the agreement given the outbreak of the coronavirus epidemic.
“As far as the Phase One deal goes, the purchases, which have not yet materialized, are a promise while the tariffs are real,” Dufault said. “The ag economy doesn’t live on promises….While there are some good provisions in the Phase One deal addressing non‐tariff barriers – those are, at best, singles when what we need is a home run.”
Another farmer witness at the hearing, Rich Guebert, president of the Illinois Farm Bureau, provided an alternative view, testifying that the Phase One provision calling for China to purchase roughly $40 billion worth of U.S. agricultural products in each of the next two years “will provide a huge and timely economic lift” to U.S. agriculture. “We recognize…that the purchases called for in the agreement have not happened yet….We certainly know the markets have yet to move,” Guebert said. “But farmers are optimistic. We understand that we’re just at the beginning of an exciting new chapter and we patiently await the benefits of this new trade agreement.”
Meanwhile, there were indications that China was in the market this week bidding for U.S. sorghum for shipment in April and May, following up on purchases made about a week earlier.
Lighthizer Meets with UK Trade Secretary: In another trade development, Lighthizer met in London on Feb. 27 with United Kingdom (UK) International Trade Secretary Liz Truss, with the UK reporting that the two “reiterated their commitment to get on with negotiating a free trade agreement and improving the bilateral trading relationship” between the two countries.
The UK said it is scheduled to publish its negotiating objectives for the talks next week, with negotiations expected to ensue in early March in London. USTR Chief Agricultural Trade Negotiator Gregg Doud noted that USTR already has pursued preliminary trade promotion authority discussions with Congress on the United States’ negotiating objectives, and will be prepared to begin the negotiations with what he called a “legitimate top 10 market for U.S. agriculture.”