What’s next in U.S.-China trade deal?

By Jennifer Whitlock

After an eight-month review, U.S. Trade Representative (USTR) Katherine Tai has begun talks with China about the bilateral trade agreement between the two nations.

Virtual meetings between Tai and China’s Vice Premier Liu He were initiated in early October after she delivered a speech detailing U.S. concerns and expectations with the agreement.

During her speech at the Center for Strategic and International Studies (CSIS), Tai said the interaction and relationship between the world’s two largest economies affects not only the U.S. and China, but billions of people in other nations.

“I have said this before and I will continue to say it: the U.S.-China trade and economic relationship is one of profound consequence. This bilateral relationship is complex and competitive,” she said. “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world. It is increasingly clear that China’s plans do not include meaningful reforms to address the concerns shared by the U.S. and many other countries.”

The U.S. agricultural sector was repeatedly mentioned. Tai said agricultural purchases by China are an area in which the U.S. has seen progress under the phase one trade agreement and that U.S. agricultural exports were stabilized by the temporary deal.

However, she noted China’s deployment of regulations that limit or threaten market access for American farmers and ranchers has left U.S. agriculture on an unequal playing field.

“While we have seen more exports to China in recent years, market share is shrinking and agriculture remains an unpredictable sector for U.S. farmers and ranchers who have come to rely heavily on this market,” she said.

With the phase one trade agreement set to expire Dec. 31, U.S. agricultural organizations are closely watching the USTR’s movements on the issue.

In late August, American Farm Bureau Federation (AFBF) President Zippy Duvall sent Tai and U.S. Secretary of Agriculture Tom Vilsack a letter asking the administrators to consider the impact of trade actions on U.S. farmers and ranchers.

“Farm Bureau strongly urges you to resolve trade concerns with China within the boundaries of the U.S.-China phase one agreement and work to extend purchase commitments,” Duvall wrote.

Last year, China committed to purchasing $34 billion in U.S. goods and services, but totals were closer to $27.2 billion. Although it is behind in purchase commitments for manufacturing and energy, China is much closer to meeting agreements of agricultural purchases. From January to August 2021, the U.S. exported nearly $18 billion of agricultural products, according to an analysis by AFBF Economist Veronica Neigh.

“We believe the cumulative exports to China needs to be about $20 billion, at this point, in January through August,” Neigh said during an AFBF Newsline podcast episode in late September. “So, that means they’re only 12% behind where they need to be in order to reach the 2021 total value.”

China’s state news agency, Xinhau, reported after the first talk Liu asked the U.S. to eliminate tariffs and sanctions and clarified China’s position on its “economic development model and industrial policies.”

No specific trade issues or any one industrial sector were mentioned by Xinhua in the statement.

USTR also released a short statement after the first talk saying the two sides would consult on “certain outstanding issues.”

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