U.S. top farm negotiator tones down approach to China trade deal

Supply Lines is a daily newsletter that tracks Covid-19’s impact on trade. Sign up here, and subscribe to our Covid-19 podcast for the latest news and analysis on the pandemic.

When it comes to measuring China’s compliance with promises to buy more American farm goods as part of a landmark trade pact between the world’s two biggest nations, the U.S. top agriculture negotiator seems to have mellowed out.

In a speech at a U.S. Soybean Export Council webinar, Gregg Doud steered clear of comments on the binding nature of the phase-one trade deal, its enforcement mechanisms and the ability to re-impose tariffs. When asked about the sanctions for non-compliance, he stressed: “This is a two-year commitment,” referring to the duration of the agreement between the two countries, which was signed in mid-January and kicked off a month later.

Thursday’s speech was in sharp contrast with previous appearances by the U.S. Trade Representative’s chief agricultural negotiator. At the U.S. Department of Agriculture’s annual forum in February, he said both nations would meet monthly to discuss progress and that a lack of compliance could allow each of the nations to impose tariffs equivalent to the size of the damage.

“There’s going to continue to be a dialogue and discussion, and keep in mind this is a two-year commitment, so you are going to have to look at this over time,” he said. “Everyone wants to measure month to month to month, how we are doing there. At least from my perspective, we have to give this some time.”

American farm exports to China have been running behind the pace need to reach the $36.5 billion pledged for 2020. Shipments of agricultural and related products to the Asian nation totaled $7.63 billion from January to July, Census Bureau data showed Tuesday. That’s about 23% of the target. The USDA’s forecast also cast doubt over whether the targets will be reached for in the two-year deal.

Doud was positive about meat sales to China, with pork exports in the first half of the year climbing to a record, he said. He also added that China has bought a lot of corn and recently ramped up purchases of soybeans, which are now back to levels prior to the trade war, he said.

Beyond purchases, China also completed 50 of the 57 structural changes it agreed to make under the phase-one deal to facilitate agricultural trade, he said, highlighting the opening of beef and poultry markets as well as changes that allowed dairy exports to rise more than 20%. The U.S. now has 3,500 facilities approved to export agricultural products to China, up from 1,500.

“There’s a lot of discussion and dialogue that continues between the U.S. and China, not only in this area of agriculture but overall,” he said, adding that the Asian nation is following through with its plans.

“It isn’t just rhetoric, they are making purchases and hopefully now the pace that we have going here we are able to sustain.”