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Ag economist: a new U.S.-China deal needs stronger enforcement, clear ag purchase targets

Frayne Olson, a grain marketing economist with North Dakota State University Extension, says more details and stronger enforcement mechanisms are needed in any new trade agreement between the U.S. and China.

“You know the Chinese are going to want flexibility on what they buy, how much they buy and when they buy it, but we do need some very specific targets. There has to be some implications for not reaching the targets.”

He says the phase one trade deal lacked both.

“Based on my reading of it, I didn’t see anything where there were any penalties for not reaching the objectives that were set forth.”

The U.S. and China are scheduled to meet again in South Korea on Thursday, and Olson says if there’s a trade deal reached, the timing of ag purchase commitments are key.

“Our soybean exports into the global market, whether it be to China or other countries, is very seasonal. If we miss this sales window before the the Brazilian soybean crop comes on, it’s going to be much, much harder for us as the U.S. to be directly competitive from a price standpoint with the the new crop soybeans coming out of Brazil.”

Olson says the volume of U.S. ag commodities China buys is equally as important, with any increased purchases expected to bring optimism to the markets.