Pork Industry Anticipates Phase One Trade Deal Specifics

03:14PM Dec 13, 2019
China Tariffs
Pres Trump orders $50 billion in trade tariffs against China
( MGN )

The pork industry is excited about the prospects for expanded opportunities in China after the U.S. and China agreed on the text of a phase one trade deal, which will see the removal of tariffs on Chinese goods in stages, Bloomberg reports.

"We have agreed to a very large Phase One deal with China," President Donald Trump tweeted. "They have agreed to many structural changes and massive purchases of agricultural product, energy and manufactured goods, plus much more." 

Pro Farmer policy analyst Jim Wiesemeyer said both countries appear to be negotiating in public via various press statements or tweets. 

“Nothing should be seen as official until actual text is released, if it is. And recall that U.S. officials, including President Trump, on Oct. 11 said an agreement in principle was reached regarding Phase One,” Wiesemeyer said. “That now was misleading if not simply untrue. China today gave no confirmation of dollar specifics regarding purchases of U.S. farm products.”

Wisemeyer added that some advisers to the White House said China had agreed to buy $50 billion worth of American farm products next year, but China has so far not confirmed that figure and the U.S. Trade Representative did not provide an official figure in its statement.

“I hate to say it, but we’ve been burned before,” Wiesemeyer said in an interview with AgDay’s Clinton Griffiths. “I don’t care what Trump is saying on the $50 billion. Verify it with text and verify it with the Chinese officials’ comments and, if that’s the case, let’s get on with it.” 

More details needed
Still, Illinois pig and grain farmer Mike Haag said it’s a step forward.

“I’m cautiously optimistic,” Haag said. “Until it’s in concrete and the check is written, I don’t know if you can believe it or not.”

U.S. Meat Export Federation (USMEF) president and CEO Dan Halstrom said he is looking forward to learning more details about the Phase One agreement. 

“U.S. pork and beef products have been subject to burdensome retaliatory duties in China since 2018, and this has made it very difficult for the U.S. industry to capitalize on China's rapidly growing need for high-quality proteins,” Halstrom said. “But long before retaliatory duties entered the picture, non-tariff barriers were a major, persistent obstacle for U.S. exporters looking to expand their business in China. USMEF thanks the Trump administration for bringing these issues to the forefront in an effort to persuade China to follow international standards for red meat trade.” 

A world market
Northwest Iowa pork producer Bill Tentinger said he’s been patiently waiting for this day. His first reaction? This is great news. But he said farmers need to remember that this will likely be a short-term situation. The world marketplace will adjust and producers will need to continue to earn their share of that market.

“I fear that there are some producers out there who think this is God’s gift to mankind, but it still comes back to the fact that this is a world market and we have to earn the business,” Tentinger said. “The Chinese are astute businessmen. For the short run, it might be more emergency or quick orders. But that will taper off and they will still want a quality product, the right product for their markets.”

Tentinger said the U.S. pork industry needs to be aware of what China wants and be willing to provide them with that product.

“In the last 6-8 months, with the ractopamine issue and China’s refusal to accept our use of it, I’ve noticed the attitude on producers in my part of the world change dramatically,” he said. “We need to provide what they want to fill that market and niche.”

Pork can slash the trade imbalance
Few products are better positioned to slash the trade imbalance with China than pork, the National Pork Producers Council (NPPC) said in a statement released Friday. Not only is China the world's largest producer and consumer of pork, but African swine fever (ASF) has currently dropped China’s pork production by 50%. 

NPPC has been advocating for China to eliminate all tariffs on U.S. pork — both the 60% punitive tariff in retaliation for U.S. trade policy decisions as well as the 12% WTO/MFN tariff. 

Dermot Hayes, an Iowa State University economist, estimates that if China eliminates tariffs, U.S. pork exports would grow to almost $25 billion annually, creating almost 200,000 new U.S. jobs, and reducing the trade deficit with China by six percent within 10 years. 

“The United States is able to supply large quantities of safe, high-quality pork at affordable prices,” NPPC said. “A robust deal on pork with China is needed.”

Haag said that the opportunity to sell more pork to China should make all farmers happy. 

“For every pound of pork we export, we’re moving corn and soybeans, too,” Haag said. 

More from Farm Journal's PORK:

Wiesemeyer on China Deal: We’ve Been Here Before

China Says Deal Agreed, U.S. to Roll Back Tariffs in Stages

Trump Signs Off U.S.-China Trade Deal to Avert December Tariffs