U.S., China Agree on Protocol for U.S. Beef Exports to China

U.S. exports could resume in 10 days: Commerce Secretary Ross

The Trump administration is showing that it is using agricultural trade to start opening markets to U.S. products, with last week’s tentative sugar accord to Mexico and now a beef trade protocol with China.

The U.S.-China deal allows for qualified beef products produced after May 24, 2017 to be exported once a plant is approved by USDA as eligible to export to China. The terms will allow in beef from cattle less than 30 months old that were raised and slaughtered in the U.S. It will also permit cattle less than 30 months old that were imported into the U.S. from Canada and Mexico for raising and slaughtering, or imported directly for slaughter.

The U.S. must establish a system that would allow Chinese authorities to track beef from individual cattle shipment to its origin. For animals born in the U.S., the system requires the ability to trace the beef to the animal’s birth farm. For cattle imported into the U.S. for finishing and slaughter, the animals have to be traced to the feedlot or farm they were first shipped to; if they were imported directly for slaughter, the first port of entry.

Links: requirements | documentation

USDA Food Safety and Inspection Service has also updated its online Export Library specifying China’s requirements for certifying U.S. beef being shipped there. “Eligible beef products exported to China should not contain growth promotants, feed additives and other chemical compounds including ractopamine, prohibited by China’s law and regulation,” the online Export Library said. “Beef shipments detected with prohibited substance or compounds at the port of entry will be rejected, returned to the US or destroyed.”

The terms allow for a variety of beef products to be exported to China, an economic boost for the beef industry.

Impact on U.S.-China beef trade developments. U.S. Commerce Secretary Wilbur Ross said U.S. exports could resume in 10 days.

“About 10 percent of U.S. cattle may meet traceability requirements,” Derrell Peel, an agricultural economist at Oklahoma State University in Stillwater, said in an interview with Bloomberg. “If we see a noticeable increase in sales volume by the end of the year, that will be promising. It takes time to develop trade.”

The U.S. Meat Export Federation (USMEF) has said that U.S. shipments may see a slow start, while the market shows promise in the long term. There will be a period of adjustment and added costs involved with the new requirements, the group. USMEF President Philip Seng said, “It is important to note that the market-opening agreement includes requirements that will involve a period of adjustment for the U.S. industry. “Meeting these requirements will add costs, and this will mean that U.S. beef is priced at a premium compared to other suppliers in the market. With that said, China holds exciting potential for the U.S. beef industry.” Craig Uden, president of the National Cattlemen’s Beef Association, said, “We hope that by getting our foot in the door we can develop a long-lasting and mutually beneficial relationship with China.”

China is now the world’s second-largest importer of beef, accounting for nearly 11 percent of the world’s total beef imports in 2016, according to the U.S.-China Economic and Security Review Commission. China imports an estimated $2.6 billion worth of beef from around the world. Asian countries already make up some of the largest markets for U.S. beef with Japan, Korea, Hong Kong and Taiwan making up four of the top six export markets, accounting for $3.6 billion in value in 2016.

Comments: U.S. agriculture interests have been anxious about the Trump administration’s trade policy, for good reasons. However, recent developments show that the White House trade team is initially focusing on getting more U.S. farm products into key markets. Commerce Secretary Wilbur Ross, at a Wall Street Journal event on Monday, expressed confidence that the Trump administration can achieve better trade terms through negotiations with trading partners, rather than immediately turning to tariffs or other punitive measures that could generate retaliation or other economic repercussions. Ross, speaking at the WSJ CFO Network in Washington late Monday, cited the sugar deal with Mexico as an example of one that was reached without creating acrimony. Such disputes are resolvable if the parties involved “are willing to make reasonable compromises.” He said he’s bringing that approach to wide-ranging trade and investment talks with China.

Ross provides perspective on trade with China. “It’s not inherent in free trade, in my view, that one country, namely us, has to absorb the entire cumulative trade surplus of the entire world,” Ross said. China, for instance, could reduce its $347 billion merchandise trade deficit with the U.S. if it purchased less cattle, soybeans and industrial goods from third countries and substituted more from American producers, he said.