News Phase 1 Trade Deal
Can China keep its procurement promises?
As it now appears, China is failing to deliver on its promise when it comes to the Phase 1 trade deal. Under this deal, land would buy $36,5 billion worth of U.S. agricultural products. In the first half of 2020, the country imported barely 25% of the stated amount. Agriculture Secretary Sonny Perdue says non-agricultural trade issues stand in the way.
In signing the trade deal, China has pledged to import $36,5 billion worth of U.S. agricultural products by 2020. Mainly soybeans, corn, wheat, rice, nuts and a lot of livestock and meat would benefit from the deal. However, the export of these products to China is not going smoothly.
The latest trade data from the US Census shows that China imported just $8,6 billion worth of products from January to July. The end of this year is fast approaching. According to Perdue, the superpower is doing everything it can to comply with the agreement, but he is not sure whether this will succeed.
Crossing Issues
From the moment the trade deal is in place, there is a tinge of vagueness about it. The same applies to the reason that China cannot keep its promise. According to the Minister of Agriculture, this is due to various non-agricultural trade issues, but Perdue is unable to clarify the relevant issues. Tensions between the two sides have been going on for a long time. For example, the trade war has not yet ended, which was previously rekindled by, among other things, choices from President Trump.
Since the implementation of the Phase 1 deal, there have been various issues that affect the trade relationship. For example, there is the American ban on the popular Chinese app TikTok. In addition, in mid-July Trump curtailed the special treatment Hong Kong enjoyed in the US (privileges, economic benefits and export of sensitive technologies). Hong Kong and China will be treated the same by the US from then on.
Does agriculture benefit?
Now that the ultimate goal is unlikely to be reached, the question is whether agriculture will indeed benefit from this deal. Still, both parties seem to understand that the only connection that keeps their 'relationship' going is the trade deal. After talks between the two parties in mid-August, calm seems to have returned. The stock markets relaxed again and assumed a positive mood. Agriculture also received a boost from the telephone call in question. The purchase of agricultural products increased significantly rapidly. In August and September, about 12 million tons of soybeans and 4 million tons of corn were sold to the Asian powerhouse.
Jorine Cosse
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