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Accountability beats a trade war

A North Dakota farmer says enforcement is better than starting another trade war as the Trump administration investigates China’s follow-through in the phase one trade deal.

Josh Gackle says China remains the most important export market for U.S. soybeans, and the recent Section 301 investigation is a good enforcement tool.

“They’re looking to see if and how China made those commitments and if they didn’t, why not? And what remedies are available?”

The past chairman of the American Soybean Association says China fell short of its ag purchase commitments in the phase one trade deal by about 23 percent.

“Given that soybeans are the top ag export to China, you would imagine that biggest share of that probably was soybeans.”

He testified at a hearing about the phase one trade deal at the Office of the U.S. Trade Representative on Tuesday. Gackle tells Brownfield there were price loopholes in the agreement.

“If U.S. beans were so much more expensive, and I don’t know the percentage, but so much more expensive than a Brazilian soybean, then they wouldn’t have to fully meet the commitments under phase one. As the USTR moves forward, if they’re going to do new negotiations, (I told them) you may need to reconsider those off ramps for market prices.”

He says certainty and accountability are needed when it comes to the timelines promised in any deal, like a recent agreement to buy 12 million metric tons of U.S. soybeans by the end of the year.

“It’s causing confusion and anxiety not just on our farms, but when I talk to elevators and grain merchandisers back home who are seeing freight rates and basis levels jump all over the place because there’s announcements made, but then you don’t know if there’s really gonna be the follow through on the purchasing end.”

Other ag groups, including the American Seed Trade Association and the Renewable Fuels Association, testified in the USTR hearing with ASA.

The ASTA said China failed to implement the most significant ag biotech provisions within the agreement, including a promise it made to issue approval decisions on biotech crops within 24 months.

RFA CEO Geoff Cooper said the investigation is justified, because the failure for China to fully implement the phase one deal has resulted in lost market opportunities for U.S. ethanol producers and the farmers who supply grain to them.

Following Tuesday’s hearing, a Section 301 Committee will analyze the feedback and USTR will issue a final determination whether China failed its commitments in the phase one deal, which could potentially lead to new tariffs or focus on new negotiations with China.