USTR reviews China trade agreements, market purchases
Completed in 2020, the U.S.-China Phase One Agreement was a historic and enforceable trade deal in which China committed to a substantial amount of purchases of U.S. goods and services throughout 2020 and 2021.
U.S. Trade Representative (USTR) Ambassador Katherine Tai shared, the U.S. agricultural markets stabilized under the Phase One trade deal with focused market purchases, though a new strategy may be needed to address the continuation of the trade relationship and hold China accountable to finishing the agreement.
According to U.S. Secretary of Agriculture Tom Vilsack, the Phase One trade deal included $80 billion in combined ag purchases for the 2020 and 2021 calendar years, which expire at the end of 2021. Currently, ag purchases are roughly $5 billion short of the agreed amount. Vilsack expects the U.S. to encourage the Chinese government to fulfill the trade agreement over the next year.
Tai spoke at the Center for Strategic and International Studies on Oct. 4. During the event, she outlined the Biden administration’s review of the trade relationship, working with allies to confront China and new tools to combat China’s actions.
During a recent Around Farm Progress podcast, Farm Progress Policy Editor Jacqui Fatka further explained the decisions and implications surrounding the future of the trade agreement.
End-of-year expectations
“This trade agreement went into effect in early 2020, and we all know what happened in 2020 – a pretty big shutdown of the world,” Fatka said. “So, Phase One was basically a two-year promise of $80 billion of ag purchases, and we are only $5 billion short, and that feels pretty good.”
Fatka shared, when this trade agreement was made, many people were skeptical because crop purchases were much greater than historical levels. However, when it comes to rebuilding swine herds, China is looking to source greater energy and protein feeds. Previously, China was mostly a soybean importer until this year.
“China is going to be around for a while in terms of buying corn, whether or not we have the agreement,” she said. “But, it is nice to have that push and be able to incentivize more ag purchases.”
While unsure of what to expect in the coming months as 2021 comes to a close, Fatka shared the U.S. may see some increased purchases.
In addition, Vilasck has made comments on the unmet sanitary and phytosanitary regulatory issues China agreed to in the Phase One deal.
“Of the 57 regulations promised in Phase One, seven remain and one of the largest is biotechnology approvals, which ensure biotechnology trades have the same access and ability to import into China,” Fatka explained.
Next steps
Currently, there are no further purchase agreements extending after Jan. 1, 2022. Although the name Phase One insinuates additional phases of trade agreements, the Biden administration has not made any announcements to continue the line of this trade relationship.
“Nobody can predict what will happen,” Fatka said. “What we heard from Tai last week is the Biden administration doesn’t see this as a Phase Two, but this trade is also not in negotiation, bu rather, discussion looking to hold China accountable for what they promised.”
She continued, “If there are things that are not completed in Phase One, whether that is ag market purchases or other categories, how the administration pushes will be important to watch. I think everyone thought maybe we can hold them to the fire and get them to change, but the bottom line is China doesn’t play by the same rules.”
To combat this trade agreement falling through, the Biden administration is looking towards an allied approach with countries who have similar concerns with how China is operating in terms of trade.
Averi Hales is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
