The “phase one” trade agreement with China could be the foundation of rural and food-sector prosperity, said 192 farm and agribusiness groups in a letter to President Trump on Tuesday that called for timely implementation of the pact, signed five months ago at the White House. The agreement calls for vast increases in Chinese purchases of US food, agricultural and seafood products but has been slow to bear fruit.
The letter enthusiastically describes “unprecedented export opportunities” in China and does not mention directly the China-U.S. trade war that knocked China out of first place among customers for U.S. farm exports. China is forecast to be the U.S.’s No. 3 buyer this fiscal year with purchases of $13 billion, compared to the average of $21 billion a year before the trade war.
“We appreciate your initiative to complete and preserve this historic trade agreement with China in the face of uncertainty in maintaining international trade flows as a result of the devastating impact of the COVID-19 virus on the world’s economies,” said the letter.
Farm and agribusiness groups released the letter a day before U.S. trade representative Robert Lighthizer was to speak on the administration’s trade agenda. Lighthizer is to appear before the House Ways and Means Committee on Wednesday morning and before the Senate Finance Committee in the afternoon. “I’m going to point out, as I have in private conversation with him, that we haven’t had enough communication between him and the Congress,” said Finance chairman Charles Grassley of Iowa during a teleconference. He also planned to bring up “certain trade — agricultural trade — issues” but did not list them.
A number of analysts are dubious that China will satisfy “phase one” goals for agriculture and food, given the slow pace of sales and the global economic slowdown that has accompanied the coronavirus pandemic. The FAPRI think tank says current conditions indicate China will not meet the targets for this year or next. The agreement calls for China to buy at least $36.5 billion of U.S. food, agricultural and seafood products during this calendar year, measured by the value upon arrival in China along with shipping costs. Purchases are to total $80 billion for the two years.
U.S. and Chinese officials have reported steady progress in removal of trade barriers between the nations and approval of U.S. processing facilities to export goods to China. “Under President Trump’s leadership, we fully expect this agreement to be a success,” said Lighthizer on May 21. As tensions have waxed and waned with China, Trump has expressed occasional ambivalence about the agreement.
“Today, the world grain and oilseed market is experiencing the greatest over-supply of production since the 1980s, and the United States is facing increasing competition from foreign sources,” wrote the farm and agribusiness groups. “The U.S.-China Phase One Trade Agreement will act as foundation for prosperity of the U.S.agriculture sector.”
Farm exports fell by 5 percent, to $135.5 billion, during fiscal 2019, when the trade war was in full force. The are forecast to be $1 billion higher this fiscal year, which ends on Sept 30.
The letter was signed by groups representing corn, soybean, cotton, wheat, rice, poultry, egg, dairy, cattle and hog producers as well as groups representing the fishery, shipping, biotechnology, ag chemical and biofuel industries. Tyson Foods, Bayer, Bunge and Smithfield Foods also signed the letter.