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China says it will expand farm imports, drop sorghum tariffs

 

WASHINGTON, D.C. — Following two days of negotiations, Chinese trade officials jointly announced with their U.S. counterparts over the weekend an agreement that China will purchase more U.S. goods, including “meaningful increases in United States agriculture and energy exports,” signaling an effort to ease a trade dispute.

But, U.S. officials say, by how much remains to be seen.

In a statement on Sunday’s CBS program “Face the Nation,” Larry Kudlow, director of the National Economic Council, said of the talks, “We have made a lot of progress. We’re going to substantially reduce our trade imbalance,” but, “China must become fair traders.”

U.S. officials told reporters on Saturday they were disappointed Chinese officials pushed backed against a White House demand that China reduce its $375 billion trade imbalance by $200 billion.

The two countries said in a statement talks over the previous 48-plus hours were “constructive,” leading to the agreement the U.S. will send a team of trade officials to Beijing with the goal to “substantially reduce the ($375 billion) U.S. trade deficit in goods with China.” The future talks will also determine what U.S. ag products the Chinese will import.

“Both sides agreed on meaningful increases in United States agriculture and energy exports,” the statement said, adding “the delegation also discussed expanding trade in manufactured goods and services” and an objective for stronger “cooperation” to protect U.S. intellectual property secrets.

“To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States good and services. This will help support growth and employment in the United States.”

Washington’s central demand has been that China cut its merchandise trade surplus with the U.S. by at least $200 billion by 2020, but China has repeatedly refused.

The weekend news also followed the Chinese Ministry of Commerce’s unexpected announcement it was lifting tariffs on U.S. sorghum imports and was dropping its anti-dumping investigation on the farm commodity. In February, China slapped a 178.6 percent surcharge on sorghum after President Donald Trump imposed a 30 percent tariff on imported solar cells.

Kudlow said China will boost its annual purchase of agricultural products and other American goods by “at least $200 billion,” but the Chinese did not confirm the number nor did the weekend statement reference a specific amount.

The talks were between a U.S. delegation led by Treasury Secretary Steven Mnuchin and a Chinese team headed by Vice Premier Liu He, one of the top and closest advisers to Chinese President Xi Jinping. Also participating were Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert E. Lighthizer, Kudlow said. The Chinese delegation departed for home on Saturday.

Kudlow told reporters Liu is a “smart guy, a market guy.”

Following China’s Ministry of Commerce decision to drop the sorghum probe, U.S. soybean futures climbed 1 percent.

China is the largest importer of American sorghum, buying almost $1 billion last year, according to the ministry. The grain competes with corn in use to feed livestock. Sorghum is also used to make a popular Chinese liquor known as maotai.

“Anti-dumping and countervailing measures against imported sorghum originating in the United States would affect the cost of living to consumers and would not be in the public interest,” the ministry said.

The Chinese also were concerned about the measurer’s harmful inflationary impact on animal feed, which would especially hit pig farmers already suffering from falling pork prices. The Chinese Embassy in Washington, D.C., did not respond to requests from Farm World seeking further comment.

Will Rodger, a spokesman for the American Farm Bureau Federation, declined comment on the talks but told Farm World, "We are waiting and seeing" what the final agreement produces.

Be ready to export?

The Washington trade meetings were a follow-up to discussions that began last month in Beijing. The White House has been demanding a dramatic reduction in the U.S. trade deficit with China that ballooned to $375 billion last year and has reached $100 billion annually for the past 16 years.

The U.S is pressing for increased Chinese buying on more ag goods, energy products such as liquefied natural gas and machinery, U.S. officials have said.

Within the past few weeks, the USDA had asked agriculture companies to come up with a list of farm products whose production could be ramped up rapidly for export, reporters were told. China, on the other hand, has put together a list of high-tech products it wants from the United States but are barred by U.S. export controls and hopes for reconsideration.

China called the two days of talks “positive, constructive and fruitful.” Still, Kudlow said more has to be done in pressing for relief from Chinese trade practices.

“They have to lower their tariff rates, they have to lower their non-tariff barriers. We have to have a verifiable process whereby the technology transfers and the theft of intellectual property stops,” Kudlow told reporters at the White House.

In recent years Chinese spies have been convicted of stealing U.S. trade secrets on hybrid corn seed and rice crop technologies.

The Financial Times reported that China trade watchers have expressed skepticism that meeting a $200 billion reduction in the trade deficit could be achieved quickly, and said the offer, if true, may included repackaging commitments previously announced by China.

Getting to the $200 billion in reduction on a sustainable basis would require a massive change in the composition of trade between the two counties, as the U.S. trade deficit hit $375 billion last year.

“That’s an enormous number and it suggests that there could be some impressively ambitious accounting,” said Scott Mulhauser, a former chief of staff at the U.S. Embassy in Beijing and a U.S. Export-Import Bank official who now advises companies on trade issues, Reuters reported.

The Commence Ministry also said those sorghum importers penalized with the 178 percent surcharge will get a full refund over the coming months.

There has been no date set yet for the next round of talks in Beijing.

5/23/2018