U.S.-China Phase One Trade Deal

President Donald Trump walks with Chinese Vice Premier Liu He, left, to the East Room of the White House, Wednesday, Jan. 15, 2020, in Washington, to sign a trade agreement. (AP Photo/ Evan Vucci)

The United States made important progress in two trade agreements last week — victories applauded by many farmers, ranchers and farm groups around the nation.

On Wednesday, Jan. 15, President Donald Trump with China’s chief trade negotiator, Liu He, signed the Phase 1 trade agreement between the U.S. and China, a deal which aims to ease trade tensions and boost exports.

“The Phase 1 agreement with China will be a game changer for the U.S. beef industry,” said Jennifer Houston, National Cattlemen’s Beef Association president who was at the White House for the signing. “For many years, Chinese consumers have been denied access to high-quality U.S. beef — the same U.S. beef we feed our families. 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.

In her statement, she added, “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.”

The NCBA statement also called China a “potentially top export market for U.S. beef producers.”

According to the White House, the agreement stipulates China will purchase $40 billion of U.S. agricultural products. However, China has never bought more than $26 billion in U.S. agricultural products annually.

Though the details of the agreement have not been revealed, the Office of the U.S. Trade Representative stated the Phase 1 deal includes China’s implementation of “a transparent, predictable, efficient, science- and risk-based regulatory process” to evaluate and authorize agricultural biotechnology products, improvements to sanitary and phytosanitary measures, and protections of  agricultural intellectual property among other stipulations.

In the agreement, U.S. will not impose tariffs on an additional $160 billion in Chinese imports and cut existing tariffs on $110 billion of Chinese goods to 7.5 percent, half of what it was. Tariffs on approximately $360 billion in Chinese imports were left in place.

Although farm groups appreciated the Phase 1 agreement was signed, many expressed concern over Chinese tariffs on U.S. goods remaining in place.

“While China’s Phase 1 commitments are welcomed, U.S. pork exports continue to be suppressed because of the country’s 60 percent punitive tariffs,” said David Herring, National Pork Producers Council president and North Carolina hog farmer. “In order to fully capture the benefits of this deal, we need China to eliminate all tariffs on U.S. pork for at least five years.

“Pork is a litmus test for the Phase 1 deal with China,” Herring added. “The worst kept secret in the world is China’s serious shortage of pork and rampant food price inflation. If China is unwilling to drop its tariffs on U.S. pork, it’s difficult to envision the country meeting the $40 billion per year agriculture purchase commitment.”

However, additional issues are expected to be addressed in future negotiations.

“Phase 2 — I wouldn’t wait by the phone,” John Veroneau, a U.S. trade official for President George W. Bush and co-chair of the international trade practice at Covington & Burling, told the Associated Press. “That is probably a 2021 issue.”

USMCA Passage

On Thursday, Jan. 16, the Senate passed the U.S.-Mexico-Canada trade agreement intended to replace the 25-year-old North American Free Trade Agreement. The agreement passed on a vote of 89-10 and now heads to the president’s desk to await signing.

Trump previously described NAFTA as “the worst trade deal in history.”

According to the Associated Press, Mexico has already approved the agreement and Canada is expected to approve it in the coming months as Prime Minister Justin Trudeau has insisted the country would wait for U.S. approval before proceeding.

“This solidifies our trading future with our neighbors and key customers for corn and corn products,” said Kansas Corn CEO Greg Krissek.

Environmental groups, as well as Senate Minority Leader Chuck Schumer, D-N.Y., opposed the agreement, citing the deal failed to address climate change.

However, the International Trade Commission estimated the agreement would give a $68 billion boost to the economy and add 176,000 jobs after six years.

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