skip to Main Content

“Export Boom” From Phase One Deal Potentially Delayed by Coronavirus

Bloomberg writer Ana Monteiro reported on Tuesday that, “The ‘export boom’ from the U.S.’s trade deal with China will be delayed because of the coronavirus outbreak, but the economic impact ‘is going to be minimal,’ White House economic adviser Larry Kudlow said.

“‘It’s not a catastrophe, it’s not a disaster — we’ve been through this before. I think the impact is going to be minimal,’ Kudlow said on Fox Business Tuesday. ‘It’s going to be much tougher for China.'”

The Bloomberg article noted that, “Last week, Kudlow said the U.S. hasn’t seen any major effects on its economy from the coronavirus epidemic, and will refrain from using it as leverage in the second phase of China trade talks.

“The U.S. and China on Jan. 15 sealed the first phase of a trade agreement that’s supposed to take effect in mid-February. In the first year of the deal, China committed to buy an extra $76.7 billion of American goods beyond what it did in 2017, and an additional $123.3 billion in the second year. Purchases of agricultural products are particularly important for the livelihoods of American farmers who’ve been hurt in an escalating tariff war with China over the past two years and are a key base of support for Trump.”

“The text of the [Phase One] deal also includes a statement indicating that the growth in US ag exports to China set in these two years [2020-2021] is projected to continue through 2025. Figure 3 outlines those projections.” (“Thinking about the US-China trade deal,” by Chad Hart. Ag Decision Maker -Iowa State University Extension (January 2020)).
Also Tuesday, Wall Street Journal writers Katy Stech Ferek and William Mauldin reported that, “One former U.S. trade official attending a conference Tuesday in Washington said concerns over the trade deal needed to take a back seat to the humanitarian crisis playing out in China, where more than 400 people have died from the virus.

“‘The best thing the U.S. can do about this is to be compassionate,’ said Wendy Cutler, former senior trade official in the Obama administration. ‘I think there is a heavy incentive on both sides for this agreement to work … China will do what it can do to implement this deal as best it can.’

“Clete Willems, an Akin Gump partner and former Trump administration trade official, said China will push to meet its purchase targets ‘because it doesn’t want to upset the U.S.'”

Reuters writers David Lawder and Makini Brice reminded readers on Tuesday that, “The text of the [Phase One] agreement has a disaster clause that could be invoked, but how any delays could be resolved is not specified.

‘In the event that a natural disaster or other unforeseeable event outside the control of the parties delays a Party from timely complying with its obligations under this Agreement, the Parties shall consult with each other,’ the text reads.

Earlier this week, Bloomberg News reported that, “Chinese officials are hoping the U.S. will agree to some flexibility on pledges in their phase-one trade deal, people familiar with the situation said, as Beijing tries to contain a health crisis that threatens to slow domestic growth with repercussions around the world.”

“Mapping the Coronavirus Outbreak Across the World,” by Cedric Sam, Chloe Whiteaker and Hannah Recht. Bloomberg News (February 4, 2020).

The Bloomberg article added that, “A spokesman for U.S. Trade Representative Robert Lighthizer said Washington hadn’t received any request from China to discuss changes in Beijing’s purchase commitments. The Chinese Commerce Ministry didn’t immediately respond to a request for comment.”

And New York Times writer Ana Swanson reported on Monday that, “The rapidly spreading coronavirus could claim one more victim: the United States-China trade deal.”

The Times article noted that, “Privately, some Trump administration officials say that China may use the virus as an excuse to delay meeting its commitments, in hopes that Mr. Trump will ultimately be voted out of office this year.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

Back To Top