U.S. Trade Representative Katherine Tai announced on Monday, Oct. 4 that the U.S. will maintain tariffs on Chinese imports as it urges Beijing to honor commitments to purchase additional U.S. goods and services made under phase one. -agreement. They may also consider imposing additional tariffs as leverage to get China to honor the terms of the trade deal with the US and push for more meaningful reforms in a new round of talks.
The government has spent months reviewing China policies and tariffs imposed by the Trump administration, which initially taxed about $370 billion in Chinese imports. Tai also announced that the US will reopen a process for US companies to request tariff waivers. The Trump administration has launched an exclusion procedure for companies that could demonstrate that they had no viable alternative to Chinese imports. However, the Biden administration allowed that process to proceed.
At the heart of the phase one deal was China’s commitment to increase its purchases of U.S. agricultural products, energy products and manufactured goods by an additional $200 billion in 2020 and 2021. According to figures from the U.S. Census Bureau, China has set the target of $36. 5 billion, however, missed by 2020, which equates to $28.75 billion in purchases. China is also on track to miss its 2021 target of $43.5 billion. US Census figures through August 2021 estimate China’s agricultural and related purchases at $19.28 billion.
Former US Ambassador to China Terry Branstad talks to Bill Northey at the 2021 Iowa State Fair. Michelle Rook / Agweek
“They didn’t quite match what they promised to do with the first trade deal,” said former US Ambassador to China Terry Branstad. “They came close, but not quite. That was partly due to COVID and the impact it had on trade.”
However, he remains optimistic about the rest of the pact.
“We will see. We certainly hope that they will take their responsibility under the agreement and that the agreement can be extended,” he said.
Scott VanderWal, president of the South Dakota Farm Bureau, said that while China has failed to meet its obligations under the trade pact, the purchases that have been made represent a big improvement.
“No, China isn’t going to make it, but they’ve done a lot better than in the past, and it’s something that we haven’t sold to them in the past, and it increased our exports and created some excitement.” on the market, and that’s what we needed,” he said.
China’s purchases have been a real game changer for American agriculture, Branstad says.
“They’ve bought record amounts of soybeans and pork, and they’re even buying beef and chicken, which they weren’t before I went there,” he said. “So we’re really happy with that, and it’s made a real difference in the price American farmers get.”
Branstad admits that not all of China’s shopping spree was linked to the deal. Much of the purchases stemmed from China’s need to replenish their strategic reserves after COVID-19, and pork purchases were largely a response to African swine fever that decimated China’s pig population. In addition, Branstad said the Chinese farmers had some problems with the harvest.
Mike Yost, former president of the American Soybean Association and former head of the Foreign Ag Service, said his sources confirm China’s intentions.
“I was told they are filling up the reserves,” he said. “They were empty and food security is an important thing in China.”
VanderWal agrees that China’s shopping spree was more about trying to raise the living standards of their middle class than trying to abide by the agreement’s rules.
“They continue to expand their population. They want more protein and higher quality diets, and to do that they need to import more things like soybean oil, pork and beef,” he said.
Yost indicated that China’s purchase of agricultural goods in 2020 was a surprise to him. With his extensive experience working with them as a trading partner, he doubted they would uphold their end of the deal. So going forward, he’s not sure if they’ll make all of the promised purchases for 2021.
“I only believe in what I see being loaded and unloaded into the boat in China, because I think things could explode at any moment, and they’ll use any rational means to undermine the deal,” Yost said.
VanderWal also tries to stay positive.
“In the future, we will still need them as a customer, and whether they really deliver on that commitment they made, we weren’t sure when they made that commitment that they would ever achieve it, but like I said, it’s more than we had before,” he said.
Tai complained in its comments that additional market reforms are needed in China as their regulatory authorities continue to take measures that limit or cut market access for US producers and hurt their profits. She said the Chinese government continues to ignore global trade rules and undermine businesses and workers around the world.
Rather than reform, “Beijing has doubled its state-oriented economic system,” Tai said, adding that it is clear China’s plans do not include meaningful reforms to allay concerns raised by the US and other countries. have been voiced.
That leaves Branstad and others cautiously optimistic about reaching phase two of the pact.
“Which will be even more difficult because phase two had to do with stopping the subsidy from these Chinese companies, state-owned companies,” he said.
Senior Biden government officials say that while they plan to pressure China over issues that were left out of the deal, they doubt China will agree to serious negotiations for a second phase.
Yost agrees that the second phase will be a heavy burden.
“There are so many things at play when you talk about China,” he said. “They will become a major consumer of agricultural products. The big question is where they are going to get them, and the geopolitical process will play a big part in that.”
Yost said the fierce competition from South America, coupled with the fact that agricultural trade often gets entangled in political strife, could make the US the second-choice supplier.
“We’re going to pressure them for human rights, the situation in Hong Kong, Mongolia and other places, and they’re going to say, hey Brazil has a harvest. We will buy there,” he said.
Still, farmer groups are putting pressure on the administration as tariffs on agricultural imports to China would be renegotiated and potentially scrapped through the phase two deal. Those tariffs have seriously hurt U.S. agriculture compared to global competitors.