U.S./China trade

U.S./China trade

By Barbara Olejnik

Poultry Times staff

bolejnik@poultrytimes.com

WASHINGTON — U.S. and Chinese negotiations for a trade agreement between the two countries have hit a road block as envoys for the two nations have halted talks.

Trade talks were set to continue when China's top negotiator, Vice Premier Liu He, arrived in Washington on May 9 for the latest round of discussions.

Those talks, however, ended with nothing forthcoming on any agreement.

The result was an increase in tariffs from each country on the other nation's products.

The U.S. raised import taxes on $200 billion of Chinese goods from 10 percent to 25 percent at 12:01 a.m. on May 10.

China responded with plans to raise tariffs on $60 billion of U.S. goods beginning June 1.

Each country has said that the reason for the breakdown in trade negotiations was the other country's fault.

Each country alleges that the other nation was seeking changes to a deal that had largely already been agreed to.

President Donald Trump, in a May 19 interview with Fox News Channel said that the U.S. and China "had a very strong deal, we had a good deal, and they changed it. And I said that's OK we're going to tariff their products."

China, however, has blamed the U.S. for changing its mind on deals to achieve a U.S.-China trade agreement.

Chinese President Xi Jinping has called for the nation to embark on a new Long March and "start all over again" — a sign that Beijing has given up hope of reaching a trade deal with the U.S. in the near term, according to the South China Morning Post.

The Long March was a military retreat taken by the Red Army, the forerunner of the People's Liberation Army, to evade Kuomingtang troops during the Chinese civil war. The feat is often evoked as a symbol of Chinese unity by the Communist Party.

The U.S. is seeking changes to China's trade and economic policies, including an end to forced technology transfers and theft of U.S. trade secrets.

U.S. companies have long complained that China requires them to turn over trade secrets in order to have access to the Chinese market. In some cases, U.S. businesses are required to form a joint venture with a Chinese partner and share technology with them.

The U.S. has said the goal is for the Chinese partner to learn and eventually replace its foreign competitor.

The future impact on U.S. agriculture of this ongoing trade dispute with increased tariffs is uncertain.

However, U.S. agriculture groups continue to call for a resolution to what has been termed as a "trade war."

American Farm Bureau President Zippy Duvall said the six-year downturn in farm prices that has produced "near unprecedented economic uncertainty and hardship" is worsening as a result of Chinese tariffs.

In a May 15 letter to President Trump, Duvall said, "We ask that your trade negotiators make a deal as soon as possible to end the tariffs that are slashing our exports, destroying a once-promising market for agriculture, worsening the farm economy and contributing to high levels of stress and uncertainty for many farm and ranch families and other Americans whose jobs are connected to agricultural production."

While trade barriers exist that are keeping U.S. pork and poultry out of China, Sanderson Farms CEO Joe F. Sanderson Jr. said if the trade war between the two countries were to end, it could create some great opportunities.

"We have had inquiries about product availability to go to China already," Sanderson said, noting that there is a demand for whole legs to be further processed.

Chicken paws are also a popular product in China, but at the present time, the 60 million pounds of paws that Sanderson Farms is producing annually are reaching their full potential, largely due to a poultry ban.

China has banned both chicken and turkey because of an outbreak of avian influenza in the U.S. in 2015. Although that outbreak has long been contained, the ban remains in effect. Industry groups like the National Turkey Federation had hoped the ban would have been lifted in a new trade deal.

Sanderson Farms Chief Financial Officer Mike Cockrell notes that many of Sanderson-produced chicken paws are being sold to renderers for five cents a pound.

Should the Chinese market open up, the value of the chicken paws could increase exponentially, Sanderson indicated.

To aid U.S. farmers affected by trade tariffs, President Trump has authorized USDA to provide up to $16 billion in programs, which is in line with the estimated impacts of retaliatory tariffs on U.S. agricultural goods and other trade disruptions.

"President Trump has great affection for American farmers and ranchers and he knows they are bearing the brunt of these trade disputes," said Secretary of Agriculture Sonny Perdue. The plan we are announcing today ensures farmers do not bear the brunt of unfair retaliatory tariffs imposed by China and other trading partners."

USDA will use the following programs to assist farmers:

  • Market Facilitation Program (MFP) for 2019, authorized under the Commodity Credit Corporation (CCC) Charter Act and administered by the Farm Service Agency (FSA) will provide $14.5 billion in direct payments to producers.
  • The CCC Charter Act authority will be used to implement a $1.4 billion Food Purchase and Distribution Program through the Agricultural Marketing Service to purchase surplus commodities affected by trade retaliation. These commodities would include fruits, vegetables, some processed foods, beef, pork, lamb, poultry and milk for distribution to food banks, schools and other outlets serving low-income individuals.
  • The CCC will use its Charter Act authority for $100 million to be issued through the Agricultural Trade Promotion Program to assist in developing new export markets on behalf of producers.

North American Meat Institute President and CEO Julie Anna Potts said NAMI appreciates the administration's "continued commitment to livestock producers facing significant economic losses resulting from tariffs imposed by some trading partners, notably China."

Potts noted that according to a U.S. Meat Export Federation analysis, losses to the U.S. pork industry from tariffs imposed by China could reach $9.08 per head or $1.14 billion annually. USMEF also estimates that U.S. beef export losses in China this year will likely exceed $430 million or $15.93 per head due to the tariffs.

The American Soybean Association also welcomed the news of financial assistance.

"We recognize and are thankful that these funds will help offset the persisting damage from tariffs, as well as enable new market development," said ASA President Davie Stephens.

However, Stephens also reiterated that the soybean industry needs open trade access. "Trade assistance will only help in the short term."

This sentiment was echoed in a statement from Iowa Secretary of Agriculture Mike Naig.

"Farmers want trade not aid," said Naig. "Farmers need markets to sell their products. This current situation is not sustainable. We need long-term trade agreements."

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