“The president said in a Tuesday morning tweet that he would be joined at the White House signing by ‘high level’ Chinese officials, whom he didn’t identify. China has been represented by Vice Premier Liu He during the nearly two years of talks. Mr. Trump also pledged to travel to Beijing to begin negotiations on the second phase of the trade deal ‘at a later date.’
I will be signing our very large and comprehensive Phase One Trade Deal with China on January 15. The ceremony will take place at the White House. High level representatives of China will be present. At a later date I will be going to Beijing where talks will begin on Phase Two!
Details on China’s purchase commitments could be left out of the text of the agreement that is made public because officials have been concerned that commodities markets could be distorted if such information is released. The deal is expected to have some flexibility so that China can tailor its purchases to market demand.
Mamta Badkar pointed out on Tuesday at The Financial Times Online that, “Having made progress on a trade truce with China and enacted the USMCA agreement with Canada and Mexico to replace Nafta, the Trump administration may now have more time to focus on the EU.”
And Washington Post writer Jeff Stein reported on Tuesday that, “A move from China to purchase more U.S. farm and energy products may not be enough to offset the heavy losses that many farmers experienced during the trade war, particularly in politically crucial swing states in the Midwest. U.S. soybean producers and other farmers have seen a sharp curtailment of their ability to sell to Chinese consumers.”
The Post article added that, “‘If the trade deal is signed and it’s real, I think we’re going to be looking at a China-driven miniboom in the ag sector,’ [University of Illinois economist Scott Irwin] said. He then clarified that if the United States somehow really did sell as much as $50 billion in agricultural commodities to China, that miniboom would upgrade to a ‘full-scale boom.’
“‘I don’t even know how we’d get to that number,’ Irwin said.”
Some Trade Action by China, While Soybean Imports Increase in November
On December 23rd, The Wall Street Journal reported that, “China will cut import tariffs for frozen pork, pharmaceuticals and some high-tech components starting from Jan. 1, a move that comes as Beijing and Washington are trying to complete a phase-one trade deal.”
And Bloomberg News reported earlier this week that, “China approved a new strain of genetically modified soybeans developed by a U.S. company, a move that could bolster looming trade talks.
“The variety approved for import is an insect-resistant soybean from Dow AgroSciences LLC, according to a list published by China’s agriculture ministry on Monday. The nation also approved a new type of GMO papaya and renewed permits for 10 crop varieties, including corn and canola.”
‘The news helps confirm China’s opening of its market to U.S. GMO products and dropping additional non-tariff barriers,’ said John Payne, senior futures and options broker at Daniels Trading in Chicago.
More broadly, Bloomberg writers Isis Almeida and Michael Hirtzer reported last week that, “In the agriculture world, news of the partial U.S.-China trade deal has sparked a lot of buzz about soybeans. It turns out, wheat could actually end up being a bigger surprise winner.
“Speculation is mounting that China will work to fill its wheat-buying quota as part of the detente, a pledge it failed to stick to in the past. While the allotment, set by the World Trade Organization, could be filled by supplies from any country, it still means additional global demand at a time the market is tighter.”
Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.
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