China is closer than commonly realized to fulfilling its commitment to buy vast amounts of U.S. food and ag products this year, said U.S. trade representative Robert Lighthizer on Thursday, rebutting criticism that the “phase one” trade agreement is faltering. “If you had to bet right now, you’d say they’re going to do it,” said Lighthizer, who suggested China might buy $10 billion worth of U.S. soybeans at the end of the year.
During a pair of congressional hearings, Lighthizer said the United States would challenge Canada if it fails to remove two dairy support programs and Mexico if it refuses to allow access for U.S. biotech seeds and pesticides. The mechanism for both challenges would be the United States-Mexico-Canada Agreement, which takes effect on July 1 as the successor to NAFTA. Canada agreed to dismantle its Class 6 and Class 7 dairy supports as part of the negotiations.
Lighthizer also said prospects for a new trade agreement with the EU were dim, that he would not allow poor treatment of American ag and food products in an agreement under negotiation with Britain, and that the Trump administration wants the next director general of the WTO to crack down on China.
The “phase one” agreement with China, signed by President Trump five months ago at the White House, calls for the Chinese to purchase $36.5 billion worth of U.S. food, agricultural, and seafood products this year, and a total of $80 billion worth of the goods in 2020 and 2021. Tallies by the USDA peg ag exports to China at $4.65 billion from January through April. The Peterson Institute for International Economics (PIIE) says China reported imports of $6.3 billion worth of U.S. ag products during the period. The Chinese figure includes shipping costs.
Citing the PIIE figures, Sen. Ron Wyden, an Oregon Democrat, said the Sino-U.S. agreement “is already coming apart, with China falling behind on commitments.”
China’s purchases are “in the $10 billion or more range,” including $3 billion of soybeans and $1 billion of cotton, Lighthizer said during a House Ways and Means Committee hearing. He later elaborated, saying he included the value of purchases that were announced along with the value of goods already shipped.
“I’ve got my notes here — I can put in about $10 billion worth of purchases towards the target,” said Lighthizer during a Senate Finance Committee hearing. “All right, you then would say, okay, maybe 10 additional billion [dollars] are going to be at the end of the year on soybeans. And then you have to look at what [China purchases] kind of between now and then. And I think if you do, it’s reasonable to make the assessment that we’re going to get to those numbers [$36.5 billion] or awfully close to them.”
Most monitors track actual exports. Purchases are sometimes canceled. Some of the recent sales included in Lighthizer’s tally call for shipment during the 2020/21 marketing year, which opens on Sept. 1 for soybeans, so they could occur in the near term or in 2021. Some analysts said Lighthizer’s approach amounted to counting chickens before they hatch.
When Sen. Steve Daines, a Montana Republican, asked if China was acting in good faith given the slow sales pace to date, Lighthizer pointed to progress in removing trade barriers. A third of ag sales to China are likely to be soybeans, and they “tend to be a fall market,” he said. “Are they making substantial purchases? The number is pretty high. The trajectory is good.”
To watch a video of the Senate Finance Committee hearing, click here.
To watch a video of the House Ways and Means Committee hearing with Lighthizer, click here.