US President Donald Trump and Lui He, China’s vice premier, signed the phase one trade deal Wednesday [January 15] following a multi-month trade war and the imposition of tariffs on agricultural and feed products. Details of the agreement were not released prior to the signing.
Initially, following a section 301 investigation that concluded that China had unreasonable or discriminatory policies and practices in place in areas related to technology transfer, innovation and intellectual property the US imposed tariffs on about $50bn in goods from China in 2018 and China added 25% tariffs to a selection of products from the US including soybeans and other feed ingredients.
The early-stage agreement puts “structural reforms” in place to address China’s practices related to intellectual property, technology transfer, agriculture, currency, foreign exchange and financial services, reported the Office of the US Trade Representative (USTR).
The agreement supports an expansion of US agricultural exports and is intended to grow farm and fishery income, the USTR said. The deal addresses several non-tariff barriers to the export of agricultural products including animal feed, feed additives and feed ingredients.
“For the category of agricultural goods … no less than $12.5bn above the corresponding 2017 baseline amount is purchased and imported into China from the US in calendar year 2020, and no less than $19.5bn above the corresponding 2017 baseline amount is purchased and imported into China from the US in calendar year 2021” according to the trade agreement.
Agricultural goods include oilseeds, meat and other agricultural commodities.
The deal is a “success” for the economy, said Sonny Perdue, US secretary of Agriculture. “This agreement finally levels the playing field for US agriculture and will be a bonanza for America’s farmers, ranchers, and producers.”
Trade agreement highlights
In addition to the increased purchase of US agricultural products, China agreed to update its list of feed additives to add an additional 23 US products and improve the registration process for new feed additives, premixes and compound feed, the USTR said. The country is set to shorten the time involved to renew licenses for DDGS producers.
“The Phase One agreement will also result in new import protocols for US barley, alfalfa hay pellets and cubes, almond meal pellets and cubes, and timothy hay, allowing imports of such products into China,” the office said. The streamlined registration process for feed additives, compound feeds and premixes will no longer require manufacturer site visits and waives some export protocols.
Registered facilities are set to be listed on the General Administration of Customs (GACC) website within 20 days of site information being received and, product reviews are set to be completed within nine months of receiving an application for a new feed additive, compound feed product or premix, the office said. Licenses for product renewals would be issued in 20 days following the receipt of an application.
China has also agreed to put in place a “transparent, predictable, efficient, science- and risk-based regulatory process” to review and approve biotech products like GMO grains, according to the office.
“These changes will result in China completing review of an application for products for animal feed or further processing in an average of no more than 24 months,” the USTR said. “China will also improve the transparency and timeliness of its process and has agreed to work with importers and the US government in situations of low-level presence (LLP) of genetically engineered materials in shipments.”
Feed industry response
The American Feed Industry Association (AFIA) said that it was looking forward to implementing the terms of the trade agreement.
US feed producers have long faced challenges with the Chinese market, including restrictions on new feed additive or premix products, the association said. The agreement helps address those bottlenecks.
“Addressing the non-tariff barriers that challenge our industry in the Chinese market has been a top priority for AFIA for nearly a decade,” said Constance Cullman, AFIA CEO and president. “I am very excited about what this agreement means for the U.S. animal food industry and reopening the Chinese market for our products.”
The National Grain and Feed Association (NGFA) also welcomed news of the agreement as it marks a “first step” toward “resolving disruptions and long-standing, festering impediments involving trade between the world’s two largest economies, and contains substantial commitments from China to purchase US food, agricultural and seafood products.”
“Early indications are that the Phase One agreement will help begin the process of restoring US-China agricultural trade volumes and effectively address several existing trade impediments for specific agricultural products,” the NGFA said.
However, more work is needed to completely address non-tariff barriers to trade – including sanitary and phytosanitary issues, the association said.