Although China purchased a record amount of U.S. farm exports over the past two years, it wasn’t enough to comply with the “phase one” agreement that de-escalated the Sino-U.S. trade war, according to Agriculture Secretary Tom Vilsack. “We obviously have some unfinished business with reference to phase one,” Vilsack told lawmakers.
China agreed to increase its purchases of U.S. goods and services by $200 billion in 2020 and 2021. The agreement implied total agriculture, food, and seafood exports to China of $80 billion over the two years, but China was billions of dollars behind as the agreement entered its final month, according to a think tank that has monitored China’s performance.
“We continue to press China to increase their purchases,” said Vilsack at a House Agriculture Committee hearing. “They’re $13 billion short on purchases, and there are seven key areas where they have yet to perform — biotech approvals, DDG [distillers’ dried grains] sales, tariffs on ethanol, a variety of other [items].”
The administration unveiled a “strategic vision for realigning trade policies toward China” last October that included prodding Beijing to live up to its phase one commitments. U.S. Trade Representative Katherine Tai said other steps would include raising “serious concerns about China’s state-centered and non-market trade policies that were not addressed in the phase one deal.” The administration said it would create a “targeted tariff exclusion process” for companies that face a financial crunch but need materials from China for their products.
Asked on Tuesday if it was time to begin lifting U.S. tariffs on Chinese imports, as proposed by some business groups, Biden responded, “Well, I know that, and that’s why my trade rep is working on that right now. The answer is uncertain. It’s uncertain. I’d like to be able to be in a position where I can say they’re meeting the commitments, or more of their commitments, and be able to lift some of it. But we’re not there yet.”
China is the largest customer for U.S. farm goods, buying roughly $1 of every $5 in exports. The USDA says China purchased $33.4 billion worth of ag exports in fiscal 2021, the largest amount ever, but would buy even more, $36 billion, this fiscal year.
Earlier this month, Vilsack told the American Farm Bureau Federation convention that Tai “continues to converse with China about the necessity of living up totally and completely to phase one … We’re going to continue to press China on the need for complete enforcement and implementation of the trade agreement before we begin the process of discussing the possibility of extensions.”
The administration has made more than $13 billion of pandemic relief available to farmers and ranchers, workers, and businesses since taking office a year ago, said Vilsack, “of which almost $9 billion has been outlaid.”
EDITOR’S TAKE:
The Phase One agreement with China was a great boost to U.S. agriculture because it is designed to increase sales and lower or eliminate barriers to entry. It is only, however, as good as the integrity of the parties to live up to those promises or the ability to enforce the terms of that agreement. Like Secretary Vilsack stated, we do have some unfinished business with respect to the pact. It is now in the hands of both governments to resolve the issues of Phase One before moving into a new agreement. U.S. farmers/ranchers and organizations who represent them, are continuously seeking new markets that will lessen the dependence on China. Until that happens, we do need China to live up to the terms agreed on in Phase One!
