WASHINGTON, Nov. 21, 2015 – Agricultural trade continues to rapidly expand between the U.S. and China, but barriers are preventing tens of billions of dollars in additional exports and imports, according to a report released today by the U.S. Chamber of Commerce.
The report was released to coincide with the meeting this week of the Joint Commission on Commerce and Trade (JCCT) – an annual U.S.-China commerce and trade summit. The study contends that the U.S. could sell an additional $17.6 billion worth of soybeans, corn, tractors and other agricultural commodities and machinery to China over the next 10 years if barriers between the countries were removed.
“The report really underscores the important fact that the United States’ and China’s economies are closely connected and each country has a strong stake in the prosperity of the other,” said Darci Vetter, chief agriculture negotiator for the U.S. Trade Representative.
Vetter, who spoke at a Chamber event to unveil the report – “Cultivating Opportunity: The Benefits of Increased U.S.-China Agricultural Trade” – stressed that strengthening ties between the two countries benefits both U.S. and Chinese farmers, exporters and consumers.
“Although the growth between China and the U.S. in ag trade over the past 15 years has been impressive, there’s actually room for much more growth in that trade that can benefit both of our nations.”
The baseline forecast for agricultural trade with China shows U.S. exports to rising by $45 billion over the next 10 years under the restrictions in place today, according to the report that was produced by Informa Economics. If China were to get rid of all of its barriers to trade, including tariff-rate quotas, a slow, asynchronous approval process for biotech seed traits, along with domestic subsidies, that 10-year increase could be as much as $62.6 billion.
There are also U.S. obstacles to improving trade, such as anti-dumping and countervailing duties, according to the report.
Beyond that, the candidates in the recent U.S. presidential election both fanned a wave of anti-trade sentiment. The eventual victor, Donald Trump, was sharply critical of the U.S. trading relationship with China and even proposed slapping a 45 percent tariff on imported Chinese goods. That has sparked fears of a trade war with the largest market for U.S. agriculture exports.
“On the U.S. side, addressing these barriers means looking past what has been the difficult trade rhetoric of the past several months and really examining what is in it for us and why it is in our interest to make sure that trade runs smoothly,” Vetter said.
Another speaker, Joe Glauber, a senior research fellow for the International Food Policy Research Initiative and former USDA chief economist, said erecting a major trade barrier on China would be tantamount to the U.S. shooting itself in the foot.
China is the largest importer of U.S. soybeans and the Asian country’s demand for-based feed is going to grow substantially as people increase their meat consumption, Glauber said.
“It would certainly cause a world of hurt if (China) were to close off the U.S., which is obviously shipping a lot of soybeans … ,“ Glauber said.
The U.S. exported about $10.5 billion worth of soybeans to China last year, down from $14.5 billion in 2014, according to USDA data.
South American countries would be happy to take away the U.S. share of China’s market, although it could not happen quickly, Glauber said.
“I think (trade wars) can be devastating and let’s hope it doesn’t get to that point,” he said.
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