After months of back and forth between the U.S. and China, the countries have announced the first of a possible three-phase deal that will lead to further negotiation on remaining items. Agriculture appears to be the main focus of the October 11th announcement which includes a major escalation in the buying of U.S. agricultural products.
What was agreed to?
- China will scale up to US$50 billion in agricultural commodity purchases within two years, according to U.S. President Donald Trump;
- Some structural agriculture issues including biotechnology and phytosanitary items; and,
- Portions of the concerns about intellectual property and financial services were addressed, according to reports.
What will the up to US$50 billion be made up of?
This is one of the big questions to be answered prior to the signing, which is anticipated in about 5 weeks. Before the trade war started U.S. ag exports to China were only a US$21 billion. While the Chinese side has been relatively quiet about the agricultural component of the deal, there could be real upside for Chinese demand.
What trade experts are saying
Across news publications and social media, trade experts are cautious-t0-critical of this first phase of a trade deal. Most of the caution is based on President Trump’s past claims of large increases to agricultural exports.
My deal with China is that they will IMMEDIATELY start buying very large quantities of our Agricultural Product, not wait until the deal is signed over the next 3 or 4 weeks. THEY HAVE ALREADY STARTED! Likewise financial services and other deal aspects, start preparing….
— Donald J. Trump (@realDonaldTrump) October 13, 2019