U.S. Agriculture Secretary Highlights Need for Mainland China to Fulfil Phase One Commitments

U.S. Agriculture Secretary Tom Vilsack said during a recent address to the American Farm Bureau Federation that mainland China must live up to its purchase commitments under the bi-lateral phase one trade agreement that were agreed in January 2020 but expired at the end of last year. Vilsack indicated the United States is working to ensure that mainland China makes up the US$16 billion deficit in agricultural purchase commitments over the course of the next several years and removes various sanitary and phytosanitary barriers to trade. Mainland Chinese trade barriers of concern include ractopamine restrictions for pork products and hormone restrictions for beef products.

Ensuring compliance with U.S. trade agreements, including the phase one trade deal with Beijing, will play an important role in building “a sense of trust across America about the important role that trade plays,” according to Vilsack. The secretary believes the process to rebuild trust domestically begins first and foremost with mainland China, a key market for U.S. agricultural exports. At the same time, U.S. agricultural officials have been working to remove trade barriers to U.S. products in other Asian markets, including India and Vietnam.

The Peterson Institute for International Economics U.S.-China phase one tracker shows that from January 2020 through November 2021 mainland China met 62 percent of its purchase commitments for goods when measured using mainland Chinese import statistics (US$221.9 billion out of a pro-rated target of US$356.4 billion), with that share dropping to 60 percent when measured using U.S. export statistics (US$199.2 billion out of a pro-rated target of US$330.9 billion).

Mainland China’s compliance with its phase one purchase commitments for goods has been higher in specified agricultural goods and lower in specified energy goods. Specifically, the U.S.-China phase one tracker shows that from January 2020 through November 2021 mainland China met 76 percent of its agricultural purchase commitments when measured using mainland Chinese import statistics (US$56.3 billion out of a pro-rated target of US$74.0 billion) or 83 percent when measured using U.S. export statistics (US$57.4 billion out of a pro-rated target of US$69.3 billion). This is up from compliance rates as of December 2020 of 64 percent when measured using mainland Chinese import statistics and 82 percent when measured using U.S. export data.

According to U.S. export data, agricultural products where U.S. exports to mainland China have soared in 2021 compared to 2017 include corn, beef, grain sorghum, wheat and edible offal, while products where U.S. exports have sagged include soybeans, frozen fish, crustaceans, and fresh apricots/cherries/peaches.

With regard to specified manufactured goods, from January 2020 through November 2021 mainland China met 62 percent of its purchase commitments when measured using mainland Chinese import statistics (US$137.0 billion out of a pro-rated target of US$222.1 billion) or 59 percent when measured using U.S. export statistics (US$117.8 billion out of a pro-rated target of US$198.9 billion). This amount is also up from December 2020, from 60 percent when measured using mainland Chinese import statistics and 57 percent when measured using U.S. export statistics.

Mainland China’s performance in this area has been dragged primarily by substantially lower shipments from 2017 to 2021 of aircraft, motor vehicles, certain wood and telephone sets, while exports of such products as electronic integrated circuits and machinery to manufacture semiconductor devices or electronic integrated circuits, as well as parts thereof, have experienced vigorous growth.

With regard to specified energy goods, from January 2020 through November 2021 mainland China only met 47 percent of its purchase commitments when measured using mainland Chinese import statistics (US$28.6 billion out of a pro-rated target of US$60.3 billion) or 38 percent when measured using U.S. export statistics (US$24.0 billion out of a pro-rated target of US$62.7 billion). By comparison, as of December 2020 mainland China’s compliance with its purchase commitments for these products stood at 39 percent and 37 percent, respectively. U.S. crude oil exports did particularly poorly in the mainland Chinese market in 2021 when compared to 2017, while coal and liquefied natural gas have fared well