Is China Living Up to Phase One Trade Agreement Obligations?

US China Trade Update 061820

U.S. Trade Ambassador Robert Lighthizer discussed China and other countries in his testimony before the House Ways and Means Committee this week. 

The committee asked Lighthizer if China had provided any signals that they were prepared to hold up their end of the bargain when it comes to making purchases of agricultural products from the United States. 

“I think if you do sort of a fair process of trying to determine how much they’re buying, I think at this phase, at this stage, they’re in the $10 billion or more range,” Lighthizer said. “As recently as last week, they bought a half a billion dollars’ worth of soybeans, for example. It’s something we are monitoring very closely.” 

Lighthizer and U.S. Secretary of Agriculture Sonny Perdue have a methodology to get a handle on the situation, he said, because the data isn’t designed to specify what a country is doing in a purchase context.

“It’s more shipments and the like. Every indication is, in spite of this COVID-19, they are going to do what they say,” Lighthizer said.

American Farm Bureau Chief Economist John Newton has been tracking agricultural exports to China. He said there's still work to be done.

“If we look at historical trends on how much we normally ship to China by this point, we’re about 60% behind where we need to be to reach the Phase One [Trade Agreement] target,” Newton said. “I know a lot of people in the trade are looking at the fourth quarter of 2020 as our opportunity to really achieve those Phase One targets.” 

Newton said the protein sector has seen positive impacts from the Phase One agreement including new plants approved for export and sharply higher exports of pork and poultry.