As large Chinese purchases of soybeans continue to roll in while rumors of a broken relationship abound, U.S. Trade Representative Robert Lighthizer assured farmers on Wednesday that the deal is still intact. Additionally, he told AgriTalk host Chip Flory that the Chinese would fulfill their Phase One purchase agreements in 2020.
“I think Peter [Navarro] was misunderstood,” Lighthizer told Flory. “Trust me that the trade deal is on. It's the biggest trade deal anybody's ever done, and it is completely on.”
Lighthizer says the Trump administration, including Agriculture Secretary Sonny Perdue, is working “full time” on the deal with the expectation that it will move forward “full speed ahead.”
When asked about the possibility the U.S. could ever “decouple” from China when it comes to trade, Lighthizer said he wasn’t interested in speculating, but that China is a huge market for U.S. agriculture.
“We have, through this agreement, for the first time ever opened up beef and poultry,” he said. “We are selling massive amounts of soybeans again. In the three or four months this has been intact, we have approved more than 2,000 new facilities to ship to China. We're up to 3,500 now, so I think it's going to be a massive impact on American farmers.”
A Tricky Relationship
The trading relationship the U.S. has with China is complicated, Lighthizer admitted, adding that President Trump is focused on getting the relationship right.
“These are the two biggest countries, two biggest economies in the world, and we're really in many ways a bipolar world and that's the other polar,” he explained.
While a big portion of the deal is purchase agreements, the rest of it deals with structural changes that will allow the U.S. to sell more goods to China.
“They took 57 commitments and they've already followed through on 50 of them, so it's a massive change. It's really, really going to have a positive effect for farmers and ranchers in this country, and we're excited about it,” he said. “But the relationship is still going to be complicated We have to get the balance right, and we have to make sure that the U.S. is safe and prosperous, and that our farmers are selling lots of products.”
Keeping Their Commitment
Lighthizer is confident the Chinese will keep their purchase commitments as part of the Phase One Deal.
“Picture it, we're negotiating through this thing where we negotiate into the new year. We finish on the 15th of January we sign it's got a 30 day entry into a fourth date so that means it's the 15th,” he says. “The question is, are the first-year commitments on a calendar year? The answer is they are on a calendar year and that puts an awful lot of pressure on the Chinese, particularly in the purchasing side to get that done in what is a relatively brief period of time. That was a specific point of negotiation. I think it's really important the president thought it was really important for our farmers and ranchers, that we get all that in during that calendar year so we expect them to do it.”
Because soybeans are one of the biggest crops on the Chinese buying list, the seasons are playing into purchase timing, he says. “But we expect them to do it all during the course of this calendar year,” he added.
Lighthizer would not provide any kind of timeline on Phase Two but said it will be dependent on the completion of Phase One.