The White House is looking for additional progress in negotiations this week to resolve the Sino-U.S. trade war even as it cautions that “much work remains.” Agriculture is among the structural issues under discussion, according to the administration, which says negotiators also discussed increased Chinese purchases of U.S. goods and services, a category that often includes farm exports, as a way to reduce China’s trade surplus with the United States.
China was the No. 1 market for U.S. ag exports, especially soybeans, before the trade war began last summer. Its purchases are forecast at $9 billion this fiscal year, compared to the average of $21 billion a year before tit-for-tat tariffs restricted sales. China said it would buy 5 million tonnes of U.S. soybeans while the nations seek a solution to the trade dispute ahead of President Trump’s deadline of March 1 for increasing tariff rates on $200 billion worth of Chinese goods.
Over the weekend, the White House said trade officials had made progress last week in Beijing and would resume discussions this week in Washington. “The United States looks forward to these further talks and hopes to see additional progress.” The U.S. list of structural issues included “forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers, and currency.”
Farm groups, exporters, and U.S. officials have complained over recent years that China has been slow to approve new strains of genetically engineered crops for import, that Beijing violates world trade rules by giving unfairly high subsidies to corn and rice growers, and that China manipulates import rules to keep out lower-priced U.S. grain. There also have been a couple of high-profile cases in which Chinese researchers and businessmen were accused of trying to steal GE seeds from U.S. developers to smuggle home.
On Friday, the USDA reported the cancellation of soybean sales to China totaling 807,000 tonnes along with the cancellation of sales of an additional 444,000 tonnes to “unknown destinations,” which could ultimately be China. Although the cancellations occurred during the week ending Jan. 3, they were not made public for more than a month due to a backlog at the USDA created by the 35-day partial government shutdown.
Chinese traders dismissed the cancellations as old news rather than a sign of backsliding by Beijing on its vow to buy U.S. soybeans. Traders told Reuters that the cancellations were probably for deals made long before the current pause in the trade war.
U.S. farmers are expected to shift decidedly toward corn and away from soybeans this spring because of the trade war. Usually, half of the U.S. soybean crop is exported, but that portion is dropping without China as a buyer. Economist Todd Hobbs of the University of Illinois said futures prices for corn “continue to underperform soybean prices,” which could deter the switch to corn somewhat. “The potential upside for corn prices given lower-than-expected planted acreage, a short crop in 2019, or a resolution to the trade dispute sparking increased consumption seems strong given current prices,” wrote Hobbs at the farmdoc Daily blog.