An interim phase one trade deal with China is a step towards a full agreement and normalized trade with China, according to the American Farm Bureau Federation (AFBF).
“China and the U.S. agreed to an interim phase one deal. Ideally, this phase one agreement will be signed in mid-January, and then will be immediately followed by negotiations for a phase two, phase three, until all of the issues within reason are solved,” Veronica Nigh, AFBF economist, said.
China has reportedly agreed to increase their purchase of U.S. agricultural products over a two year period, averaging between $40-50 billion annually. That’s compared to the $24 billion purchased in 2017 before the trade war started.
“Given that’s such a large expansion over where we were previously, the list of products and the variety of trade between China and the U.S. would have to expand pretty significantly,” she said. “When you look at the total of what China is buying from the rest of the world, there’s probably room there.”
Nigh noted farmers need more trade opportunities, like the opportunities China represents.
“Before all of this trade situation really came to a head, China was our second-largest market. And, while we certainly are exporting a lot of U.S. ag products to a wide variety of countries, it takes a lot of those smaller countries to add up to one China,” Nigh said. “So, bringing China back as a sizable market for U.S. agriculture is certainly critical to U.S. farmers’ ability to continue to grow their businesses.”
After the phase one agreement was announced, Texas Farm Bureau President Russell Boening issued a statement.
“It appears the Phase One agreement includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years, including agricultural commodities,” he said. “This is excellent news for Texas farmers and ranchers. We are hopeful the Phase One agreement creates positive momentum toward the completion of further trade agreements with China in the near future. We thank Ambassador Robert Lighthizer and Secretary Steven Mnuchin for their work and efforts to achieve this important Phase One agreement.”