Secretary Perdue: China Phase I Deal is a Bonanza for American Agriculture
U.S. Secretary Perdue issued the following statement after President Donald J. Trump signed the historic Phase One Trade Agreement between the United States and China:
“This agreement is proof President Trump’s negotiating strategy is working. While it took China a long time to realize President Trump was serious, this China Phase I Deal is a huge success for the entire economy. This agreement finally levels the playing field for U.S. agriculture and will be a bonanza for America’s farmers, ranchers, and producers,” said Secretary Perdue. “China has not played by the rules for too long, and I thank President Trump for standing up to their unfair trading practices and for putting America first. We look forward to exporting to Chinese customers hungry for American products.”
The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement. The United States has agreed to modify its Section 301 tariff actions in a significant way. Information on specific chapters of the Phase One agreement is provided below:
- Agriculture: The Agriculture Chapter addresses structural barriers to trade and will support a dramatic expansion of U.S. food, agriculture and seafood product exports, increasing American farm and fishery income, generating more rural economic activity, and promoting job growth. A multitude of non-tariff barriers to U.S. agriculture and seafood products are addressed, including for meat, poultry, seafood, rice, dairy, infant formula, horticultural products, animal feed and feed additives, pet food, and products of agriculture biotechnology.
- Intellectual Property: The Intellectual Property (IP) chapter addresses numerous longstanding concerns in the areas of trade secrets, pharmaceutical-related intellectual property, geographical indications, trademarks, and enforcement against pirated and counterfeit goods.
- Technology Transfer: The Technology Transfer chapter sets out binding and enforceable obligations to address several of the unfair technology transfer practices of China that were identified in USTR’s Section 301 investigation. For the first time in any trade agreement, China has agreed to end its long-standing practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals, or receiving advantages from the government. China also commits to provide transparency, fairness, and due process in administrative proceedings and to have technology transfer and licensing take place on market terms. Separately, China further commits to refrain from directing or supporting outbound investments aimed at acquiring foreign technology pursuant to industrial plans that create distortion.
- Financial Services: The Financial Services chapter addresses a number of longstanding trade and investment barriers to U.S. providers of a wide range of financial services, including banking, insurance, securities, and credit rating services, among others. These barriers include foreign equity limitations and discriminatory regulatory requirements. Removal of these barriers should allow U.S. financial service providers to compete on a more level playing field and expand their services export offerings in the Chinese market.
- Currency: The chapter on Macroeconomic Policies and Exchange Rate Matters includes policy and transparency commitments related to currency issues. The chapter addresses unfair currency practices by requiring high-standard commitments to refrain from competitive devaluations and targeting of exchange rates, while promoting transparency and providing mechanisms for accountability and enforcement. This approach will help reinforce macroeconomic and exchange rate stability and help ensure that China cannot use currency practices to unfairly compete against U.S. exporters.
- Expanding Trade: The Expanding Trade chapter includes commitments from China to import various U.S. goods and services over the next two years in a total amount that exceeds China’s annual level of imports for those goods and services in 2017 by no less than $200 billion. China’s commitments cover a variety of U.S. manufactured goods, food, agricultural and seafood products, energy products, and services. China’s increased imports of U.S. goods and services are expected to continue on this same trajectory for several years after 2021 and should contribute significantly to the rebalancing of the U.S.-China trade relationship.
- Dispute Resolution: The Dispute Resolution chapter sets forth an arrangement to ensure the effective implementation of the agreement and to allow the parties to resolve disputes in a fair and expeditious manner. This arrangement creates regular bilateral consultations at both the principal level and the working level. It also establishes strong procedures for addressing disputes related to the agreement and allows each party to take proportionate responsive actions that it deems appropriate.
Western Growers Statement on Signing of the U.S. – China Phase One Trade Agreement
Western Growers Board Chairman and Partner at Talley Farms, Ryan Talley, was on hand at the White House for the signing of the phase one trade agreement with China. Following the conclusion of the ceremony, Chairman Talley issued the following statement:
“Western Growers applauds the significant strides the Trump Administration has made in securing fairer deals for American farmers with key trading partners around the world. On the heels of other recent trade gains with Japan, Mexico, and Canada, the phase one agreement represents constructive progress in the effort to rebalance our nation’s trade relationship with China.
“While American farmers have borne the brunt of the trade war with China, with the overall U.S. exports of fruits, vegetables and tree nuts to China declining by double-digits over the past two years, we are optimistic that with the completion of phase one, and the future completion of phase two, U.S. specialty crop farmers will be able to achieve expanded access to, and financial gain from, this valuable Asian market.”
Western Growers President & CEO Tom Nassif added the following statement:
“The phase one trade agreement represents welcomed progress with China. We are encouraged by China’s commitment to make substantial additional agricultural purchases above historical norms over the next few years, and eagerly anticipate the removal of trade barriers that have restricted exports of U.S. fruits, vegetables and tree nuts to this critical market.
“Additionally, we applaud the Trump Administration for securing resolutions to specific sanitary and phytosanitary (SPS) issues, which will open up the Chinese market to commodities like avocadoes, blueberries, nectarines and potatoes. Looking ahead, we remain committed to supporting the Administration’s efforts to secure broader reforms to China’s SPS regime, which continues to stymie access for other U.S. specialty crop products.
“As the Administration already has its sights set on starting phase two negotiations, we are pleased that President Trump is delivering on his promise to negotiate better trade deals for American farmers, and look forward to fully realizing the economic benefits of this agreement for the specialty crop industry.”
Agricultural Retailers Association Applauds Administration, USTR on Phase One Trade Agreement with China
Agricultural Retailers Association (ARA) Board of Directors Chairman Rod Wells of GROWMARK attended the signing of the much-anticipated Phase One trade agreement between the United States and China. ARA President and CEO Daren Coppock released the following statement in support of the agreement:
“ARA applauds the Trump administration, the office of the United States Trade Representative (USTR), and those working behind the scenes to help repair trade relations between the two countries.
“This agreement will boost U.S. goods and services exports to China by a reported $200 billion over the next two years. That level of economic growth cannot be understated. We are grateful for the efforts of Ambassador Lighthizer and this administration in securing this agreement.
“Our agricultural markets have struggled mightily with imposed tariffs over the past two years. This agreement is hopefully the beginning of the end in securing a long-term agreement with China promoting free, fair and reciprocal trade that eliminates burdensome tariffs and non-tariff trade barriers. Our agricultural economy depends on it.
“The changes made to China’s trade policies surrounding agriculture, intellectual property, and dispute resolutions, among other aspects, will be a huge boost to the American trade economy.”
For more information from USTR on the agreement, click here.
NPPC Welcomes Phase-One Trade Deal with China; Urges Elimination of All Punitive Tariffs
President Trump signed the first phase of a trade deal with China that includes the purchase of $40 billion in agricultural products, including pork—by far the most significant protein consumed in China. National Pork Producers Council (NPPC) President David Herring and Board Member Craig Andersen were in attendance at today’s signing ceremony. Herring, a hog farmer from Lillington, N.C., issued the following statement:
“NPPC applauds the administration for its hard work in negotiating this deal. China is the world’s biggest producer and consumer of pork. However, the country’s hog supply has been ravaged by African swine fever — a disease affecting only pigs with no human health or food safety risks — resulting in a tremendous shortage of pork and mounting food price inflation. The U.S. is typically the largest pork exporting nation in the world and generally the lowest-cost producer in the world. We are ideally positioned to address this unprecedented sales opportunity for pork in China.
“While China’s phase one commitments are welcomed, U.S. pork exports continue to be suppressed because of the country’s 60 percent punitive tariffs. 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. According to Iowa State University Economist Dermot Hayes, if U.S. pork gets unrestricted access to the Chinese market, it will reduce the overall U.S. trade deficit with China by nearly six percent, generate 184,000 new U.S. jobs and produce $24.5 billion in new pork exports all within the next decade. However, if the U.S. continues to face 60 percent punitive tariffs (and a cumulative tariff of 68 percent), while our competitor nations are assessed an 8 percent tariff, U.S. pork sales will be suppressed as China imports more pork from other nations.”
U.S. pork producers have been significantly harmed by trade retaliation from China, losing $8 per hog—or $1 billion on an annualized industry-wide basis, according to Dr. Hayes. U.S. pork producers need tariffs eliminated, helping China manage rampant food price inflation and ensuring America fully benefits from the phase one agreement.
“Pork is a litmus test for the phase one deal with China. 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,” added Herring.
Dairy Applauds Key Achievements Made in China Phase One
Still, Dairy Market Access Contingent on Lifting Retaliatory Tariffs
The signing of the Phase One trade agreement with China makes important advances on non-tariff issues harming U.S. dairy trade. While promises of additional Chinese purchases of U.S. agricultural products in the next two years are encouraging, the benefits for the dairy industry remain unclear. Given that China’s retaliatory tariffs remain a significant impediment to U.S. dairy sales in China, the U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) stress that work with China is not complete until the retaliatory tariffs against all U.S. dairy exports are fully lifted.
“This announcement of a deal that makes progress on regulatory restrictions and other non-tariff barriers hindering dairy trade is a positive step forward. These are important deliverables that USDEC has been pressing China for over the course of the last few years,” said Tom Vilsack, president and CEO of USDEC. “We need to continue to work with our government, China’s government and our customers to finish the job by lifting the remaining Chinese retaliatory tariffs against our exports.”
“America’s dairy farmers have been dis-proportionally harmed by China’s retaliatory tariffs, and we cannot ask our farmers to continue operating under this financial uncertainty,” said Randy Mooney, dairy farmer from Rogersville, MO and Chairman of NMPF, who joined President Trump and administration officials at the White House signing ceremony on Wednesday. “We appreciate the hard work invested by both the U.S. and Chinese governments, but we urge China to swiftly lift all retaliatory tariffs against U.S. dairy products and work with U.S. suppliers to fulfill their purchasing commitment.” The Phase One deal with China makes progress on nontariff barriers important to U.S. dairy, such as:
- Tackling facility and product registration steps that have stymied firms seeking to export to China for several years;
- Improving the regulatory pathway for exports of infant formula and fluid milk (including extended shelf life milk) to China;
- Creating new transparency and due process obligations regarding geographical indications and common food names; and
- Promises of increased purchases of U.S. agricultural goods, including dairy.
Left to be fully resolved is how China will fulfill its commitment to purchase large quantities of U.S. agriculture products, including dairy.
China remains a valuable export market for U.S. dairy products, despite retaliatory tariffs. Over the 12-month period spanning December 2018 – November 2019, U.S. dairy exports to China totaled $377 million in sales. However, retaliatory tariffs on U.S. dairy products have steeply disadvantaged the U.S. industry compared to its competitors and contributed to 47 percent decline in U.S. exports to China over that same period, harming U.S. farmers, manufacturers and exporters.
NCBA: Trade Deal With China a “Game Changer” for American Beef Producers
The National Cattlemen’s Beef Association applauded the signing of a Phase-One trade agreement with China, saying this agreement will lay the groundwork for American-produced beef to be highly competitive in the world’s most populous market.
“The Phase-One Agreement with China will be a game changer for the U.S. beef industry,” said NCBA President Jennifer Houston, who joined President Trump at the White House for today’s event. “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. 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.
“We cannot begin to express our thanks to President Trump for fighting for America’s cattle producers,” Houston continued. “Restoring U.S. beef access to China was the top agenda item resulting from the Mar-a-Lago summit in 2017, and our negotiators have never stopped working to reopen the Chinese market for U.S. beef. The Trump Administration did not allow the odds to dictate the outcome, and because of their hard work and dedication, America’s cattle producers and Chinese consumers will have a stronger relationship that will benefit both countries for generations. Today is a great day for the U.S. beef industry and the National Cattlemen’s Beef Association.”
When American-produced beef was banned from China for 14 years, NCBA worked with the U.S. government for more than a decade to reopen access to the market of nearly 1.4 billion consumers. American producers scored an initial victory in June 2017, when the Chinese market was reopened for the first time since 2003. NCBA joined U.S. Agriculture Secretary Sonny Perdue and American Ambassador to China Terry Branstad in Beijing to celebrate and mark the official reopening of the Chinese market.
However, many non-science-based, non-tariff trade barriers remained in place, which limited the amount of American-produced beef that qualified for China. NCBA says that this Phase-One Agreement will begin knocking down those trade barriers and significantly improve access to what is potentially a top export market for U.S. beef producers.
NCGA President Kevin Ross attended a White House ceremony, commemorating the signing of the phase one deal between the United States and China. Ross made the following statement.
“Signing the phase one agreement with China is a step in the right direction to resolving the trade dispute with China and restoring the trading relationship between our two countries. China holds tremendous opportunity for American corn, ethanol and DDGs and NCGA looks forward to learning further details of what phase one will mean for these products. As more specifics become available, we will closely monitor implementation to ensure that the commitments are upheld and that U.S. corn farmers resume trading with Chinese customers. NCGA urges the Administration to quickly commence phase two negotiations and work to resolve retaliatory tariffs.”
Joint Statement – Phase One Trade Deal Should Restore China’s Demand for U.S. Wheat
The National Association of Wheat Growers (NAWG) and U.S. Wheat Associates (USW) are very encouraged by the signing of a Phase One trade agreement with China. Chinese imports of U.S. soft white (SW), hard red spring (HRS) and hard red winter (HRW) wheat classes were trending up before abruptly ending when China implemented retaliatory tariffs on U.S. wheat and other agricultural commodities in March 2018.
“Even though China has huge domestic wheat stocks, they were buying more U.S. wheat because they needed it to meet growing demand for higher quality wheat foods,” said Vince Peterson, President of U.S. Wheat Associates (USW), the organization funded by farmers and the U.S. government to promote wheat exports. “The losses we demonstrated soon after China stopped importing U.S. wheat have only grown since then, so we hope the agreement signed today signals a potential turn-around.”
Adding to the optimism is China’s separate agreement to work toward filling its 9.6 million metric ton (MMT) reduced tariff rate quota (TRQ) for wheat imports. If the changes are in fact implemented, and Chinese millers can respond to market signals, most of the TRQ should be used. For U.S. wheat farmers, the Phase One deal and TRQ compliance would create a very welcome opportunity for Chinese miller customers to once again apply the technical expertise and assistance USW provides to use wheat with specialized end-use applications that distinguishes U.S. wheat from domestic Chinese supplies.
“Wheat farmers have experienced the harm of unfair trading practices at the hands of China for far too long, as reinforced by the recent WTO wins. This step forward in negotiations between the U.S and China is a tremendous way to begin the new year,” stated NAWG CEO Chandler Goule. “As part of its Winter Conference this week, NAWG and its states will hold several meetings on The Hill where it will be stressed to Members and staff the need to continue expanding our international markets, including to swiftly move forward with Phase One of U.S.-China trade deal.”
Re-opening China would be a huge lift for wheat farmers who are still producing a quality product in spite of the income challenges they have faced for several years. USW and NAWG want to thank the negotiators in the Office of the U.S. Trade Representative for their dedicated effort to create this opportunity and we look forward to learning more details about the agreement.
“Our organization and the farmers we represent agree with the Trump Administration that China has not been transparent about its protectionist policies,” Peterson said. “Now it remains to be seen if China will comply fully with its WTO commitments and this new agreement so that trade between our two countries can flourish.”
USW and NAWG are especially pleased that the agreement contains structural changes to how U.S. exporters access the Chinese market. U.S. negotiators should be commended for seeing the opportunity to build on our wins at the WTO against China’s TRQ administration and agricultural subsidy policies by including provisions on administration and transparency of policies.
The additional commitments included in the agreement contain important transparency measures, such as reporting on TRQ awards and operation of subsidy programs in addition to reaffirming commitments on eligibility for access to TRQ.
U.S. Grains Council Statement On Signing Of U.S.-China Phase One Agreement
A statement from U.S. Grains Council Chairman Darren Armstrong, a farmer from North Carolina, following the signing of U.S.-China Phase One agreement at the White House:
“The U.S. Grains Council is pleased to see the signing today of a Phase One deal with China, which should reduce continued market uncertainty and incentivize China to purchase significant amounts of the full range of U.S. agricultural products, including grains, distiller’s dried grains with solubles (DDGS) and ethanol, to total at least $80 billion over the next two years.
“The structural reforms, particularly those affecting feed grains, agricultural biotechnology, and sanitary and phytosanitary measures – once fully committed and implemented – will hopefully offer lasting impacts beyond short-term commitments to make accelerated, market-driven purchases. The agreement, as we understand it, will offer opportunities for U.S. farmers to once again become competitive in China and serve our customers by addressing retaliatory tariffs and long-standing, non-tariff barriers to trade.
“Our organization and our members believe in the long-term value of international trade, and we have spent more than 35 years working with partners in China to develop its feed and livestock industry. Our sector is committed to remaining a reliable supplier of grain products and ethanol for customers in the feed, food and energy industries in China as our countries’ relationships evolve.”
RFA Hails First Phase of U.S.–China Trade Agreement
With the signing of the first part of the new U.S.–China trade agreement, Renewable Fuels Association President and CEO Geoff Cooper released the following statement.
“We are very optimistic about the potential of this agreement for American agriculture and the renewable fuels industry—with the inclusion of ethanol and key co-products like distillers grains—and are looking forward to more specific details on the agreement. America’s ethanol producers have experienced significant economic losses due to punitive Chinese tariffs on our products, and we are eager to return to a more open trading relationship with China. Chinese consumers understand that using ethanol can lower fuel prices and help address major air quality concerns in urban areas across the country. In addition, the ethanol industry’s animal feed co-products are an economical source of nutrition for China’s livestock and poultry sector.
“We hope this deal reopens the door immediately for meaningful exports of both ethanol and feed co-products to China, and we thank President Trump, the U.S. Trade Representative, and U.S. Department of Agriculture for their efforts to reopen the Chinese market to U.S. agricultural and energy products. And like President Trump in his remarks right before the signing, we also appreciate the hard work of Sens. Chuck Grassley, Joni Ernst and Deb Fischer as true champions for ethanol.”
AFBF: Farmers Welcome Opportunities from China Agreement
The United States and China today signed a “Phase 1” trade agreement that both countries say will lead to increased purchases of U.S. agricultural products by China. The following statement may be attributed to American Farm Bureau Federation President Zippy Duvall:
“Today’s signing is an important step in giving America’s farmers and ranchers the ability to get back to business in the global market.
“China was once the largest market for U.S. agricultural products but has dropped to fifth largest since retaliatory tariffs were introduced. This agreement will help turn around two years of declining agricultural exports. The potential of tens of billions more in exports is welcome news for farmers who are eager to compete on a more level playing field.
“This is a great way to start the new year, but there is more work to do. We encourage the Senate to pass the U.S.-Mexico-Canada Agreement to increase export opportunities with our North American neighbors. We also look forward to additional trade agreements with countries that are locking-in deals with our competitors. This must be a focus in 2020.”
- The agreement takes effect in 30 days.
- Over the next two years, China could potentially purchase up to $50 billion worth of agricultural products annually, according to U.S. officials.
- As a result of the agreement the U.S. did not impose threatened tariffs on $160 billion of Chinese imports in 2019.
NCC: China Phase 1 Trade Deal Holds Promise for U.S. Cotton
The National Cotton Council believes the Phase 1 trade deal with China signed today by President Trump could provide a much-needed boost to U.S. cotton exports.
The Phase 1 agreement includes a chapter on agriculture with Chinese purchases of U.S. products intended to reach at least $40 billion per year starting in 2020. However, the overall impact for cotton remains uncertain as commodity-specific details have not been released.
NCC Chairman Mike Tate, an Alabama cotton producer who was at the White House for the signing, said, “While we welcome Phase I and are hopeful about the potential for future increased sales to China, U.S. cotton producers continue to face a challenging economic climate. As such, we encourage President Trump and USDA to follow through with the third tranche of MFP payments as quickly as possible.”
Tate was referring to the Administration’s $16 billion trade assistance package through the Market Facilitation Program to help mitigate China’s retaliatory tariffs. He said this assistance, administered by USDA, has been very timely with U.S. cotton’s economic health deteriorating as market share in China is being lost to Brazil and Australia. The first MFP tranche of payments came in August and the second tranche in November.
“Since the middle of 2018, the ongoing trade dispute between the United States and China has been front and center in any discussion of the cotton market,” Tate said. “Cotton prices remain well below pre-dispute levels due to China’s imposition of a 25 percent retaliatory tariff. That’s why removal of these tariffs should be a high priority for any upcoming dialogue between the two countries.”