The U.S. and Taiwan are moving forward with formal trade talks with the first round set to take place early this fall. The U.S. Trade Representative’s Office says they’ve reached a consensus on the negotiating mandate and the U.S. and Taiwan have set a robust agenda for talks. The bigger question is how does this impact U.S. China trade relations?
The U.S. and Taiwan are focusing on issues like trade facilitation, good regulatory practices and removing discriminatory barriers to trade. This is laying the groundwork for a bi-lateral agreement but agriculture is only one part of the deal.
Frayne Olson, NDSU Extension Crop Marketing Specialist, “Obviously ag is going to be a piece of these negotiations but its not going to be the entirety. You know there’s a lot of other trade that we do directly with Taiwan between Taiwan and the U.S. ag is a portion of that. Taiwan has historically been a very good buyer of both U.S. wheat as well as U.S. corn, very consistent buyer over the years.”
The bigger question is what will this mean for the U.S. China trade relationship as China says it opposes the talks. Will it result in retaliation or will China stop buying U.S. ag goods?.
Arlan Suderman, Stone X Group Chief Economist, says, “I think it’s a legitimate risk. To this point China has tried to separate out their tensions with the U.S. with buying their commodities. I say that, they have been diversifying. They’ve been trying to move as much business to Brazil and elsewhere as they can.”
Olson adds, “Those trade tension are obviously going to make things a little more interesting and the grain markets are following it very very closely. I think there’s a lot of politics in play here we’re just gonna have to wait and see what happens.”
However, Taiwan officials say China’s economic coercion would be discussed, which may add to the rising tension between the two countries.
So far China hasn’t been signaling a slow down in purchases as they were a big buyer of corn, soybeans and beef in Thursday’s weekly export report.
