KANSAS CITY, MO. – The state of US-China relations was a hot topic during the Ag Outlook Forum presented by the Kansas City Agricultural Business Council and AgriPulse on Sept. 28. The event, which was held at the Kansas City Marriott Downtown hotel, attracted 83 in-person attendees and 192 virtual participants.
Speakers at the forum included Ambassador Gregg Doud, Chief Ag Trade Negotiator, Office of the US Trade Representative, former US Agriculture Secretary Tom Vilsack, US Deputy Secretary of Agriculture Steve Censky, Esther George, president and chief executive officer, Federal Reserve Bank of Kansas City, and representatives from agriculture industry stakeholder organizations.
The forum was a platform for wide-ranging discussions about current events affecting the US agriculture industry, and chief among those discussions was the state of US-China trade relations and the progress China has made toward meeting its obligations under the phase one trade agreement which commits China to buy $36.5 billion worth of US food and agricultural products in 2020.
Doud said that under the phase one agreement, the United States and China agreed to 57 structural changes the countries would make to facilitate agricultural trade. He said 50 of those items already are in place.
“Since we entered into force on Feb. 14 — since the big step was when China announced its exclusions process for US agricultural commodities from retaliatory tariffs on March 2 — since that time period, we have made 50 improvements in our trading relationship with China in agriculture.
“This was a massive undertaking on the part of the Chinese government and on the part of our government in the last six months or so to make all of these changes,” he said.
Those changes and improvements led to the United States gaining access to the Chinese market for beef and poultry. In 2019, Doud said, China purchased roughly $18 billion of beef products from the world.
“We never really had access for US beef into China,” Doud said. “We finally got that accomplished. There are a couple of other things that we’ve still got to fix, but unbelievable steps forward.”
“We hadn’t sold China a pound of poultry in five years,” he continued. “We got that market reopened, and in fact, if you look at what we’ve done in the last several months and take that to a 12-month basis, we’d be at a record in terms of exports of poultry to China. I think we’re well on our way to that depending on how you measure it.”
Additional advancements were made with gaining access to China’s markets for pet food and other agricultural products.
“Before we started this conversation with China, we had about 1,500 facilities in the United States in agriculture eligible to export their products to China,” Doud said. “Today, we have over 4,000 facilities eligible to export their products to China.”
Vilsack, who currently serves as president and CEO of the US Dairy Export Council, noted that the US dairy industry also scored some wins in trade with China. But he cautioned that relations between the United States and China could worsen because of several factors.
“There are international issues that could potentially cause a further disruption in the relationship — whether it’s an incident in the South China Sea, whether it’s our efforts to try to get closer to Taiwan and the Chinese reaction and impact of that, whether it’s concerns about what’s happening in Hong Kong, or minorities that are being persecuted in China — any or all of that could potentially cause a further disruption of the relationship, which could obviously have an impact on phase one and future discussions and negotiations generally.”
The pandemic, and the global response to it, will continue to have an impact on the global economy, Vilsack said. The estimates of decline in the economy globally are between 4% and 5% decline, which is roughly 2-3 times the size of the decline during the 2008-2009 Great Recession, he said.
“This has an impact specifically on China, because China still, to a large extent, relies on exports from China in order to fuel their economy, Vilsack said. “They are transitioning to a more domestic-oriented economy, but in the meantime, exports are important. To the extent the rest of world is stymied because of a downturn, this may impact and affect China’s economy which in turn may impact and affect their ability to purchase, or their desire to purchase, American products under phase one.”
The pandemic, which has claimed more than a million lives globally, may give rise to “food nationalism,” Vilsack said, which would threaten the US’s trade surplus and make it more difficult for US agriculture producers to trade with other countries.
Certification, inspection and processing requirements that discourage imports and protect domestic producers from foreign competition all are signs of food nationalism.
“Historically, we’ve always had a trade surplus in the world. Now, there is the risk that we may lose that trade surplus because of a variety of factors,” Vilsack said. “In order to maintain that surplus — in order to maintain additional markets for US products, in order to maintain the income that farmers have generated over the last 10 to 15 years because of exports — we want to make sure we are keeping an eye on that issue and discouraging governments from using that tactic to respond to difficult times by having them understand that over time there will be a disservice to their consumers if they basically restrict products coming into their country.”