USDA Issues Interim Report Card On China Ag Purchases under Trade Deal

China gets a passing grade for its adherence to the agricultural portions of Phase-One of the Trade Deal, both for outright food purchases as well as implementation of “Technical Commitments”

On Friday October 23, 2020 the Office of the U.S. Trade Representative and the U.S. Department of Agriculture issued a 13 page joint interim report on the status of the U.S./China trade deal.

Highlighted in the report are China’s “key achievements over the last eight months” including:

China has already fulfilled seventy-one percent ($23.6 billion) of its 2020 agricultural target purchase amounts from the U.S.

The purchases were made in the 7 months between March and September 2020 and are well ahead of the buying pace set by the Chinese in 2017, the base year referenced in the agreement.

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China has implemented 50 of 57 “…specific commitments to reduce and eliminate structural, non-tariff barriers to U.S. agriculture in China’s market…”

The report is clear that the Chinese are making structural and administrative changes negotiated by the U.S. that are already positively impacting a variety of U.S. agricultural businesses. In fact, the number of U.S. facilities now able to export agricultural products to China has increased from 1500 to 4000 since the agreement was signed. This is absolutely the most significant accomplishment of the agreement, the importance of which cannot be overestimated.

The entire spectrum of U.S. agricultural goods is benefiting from the Phase-One trade agreement.

Headline items like the big grains, beef, and traditional dairy products get lots of attention, but significant progress – and sales – have been made in under-the-radar items like chicken feet, alfalfa hay pellets, and infant formula. Poultry meat and dairy exporters were singled out as immediate beneficiaries of the agreement, with significant sales gains already. Indeed, poultry exports to China had been non-existent for the past four years due to disputes over avian flu paranoias on the part of the Chinese, causing poultry exporters the loss of their number one market for otherwise unwanted parts (like chicken feet), but now the entire array of poultry products can be accessed by the Chinese.

Takeaway: The Phase One Trade Deal is a Win For Both Countries

Total dollar purchasing commitments by the Chinese under the Phase One deal may or may not be achieved by year’s end, but the actual dollar amount of purchases is of far less significance than the groundwork that has been laid for increased long-term U.S. agricultural exports to the world’s most populous nation. Agricultural exports are surging and will continue to grow steadily as the balance of the terms of the deal are implemented.

China is currently in the throes of a food crisis the scope of which has not yet been completely determined; it seems the trade deal could not have come at a more fortuitous time for both China and the U.S. Agricultural sector.

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