AFBF analyzes the Phase One Trade Deal’s first year in existence
A little over a year ago, on Feb. 14, 2020, the Phase One Trade Deal between the U.S. and China took effect after it was signed into law by President Donald Trump on Jan. 15, 2020.
The agreement set lofty goals for exports from the U.S. agriculture industry to China, and now that there is a year behind it, the American Farm Bureau Federation (AFBF) sought out to understand what went right with the deal and what did not.
The Phase One Trade Deal
According to AFBF, the Phase One Trade Deal required China to commit to increase purchases of U.S. agriculture products by $12.5 billion above 2017 purchases each year for two years.
“Numbers from 2017 were specifically chosen as the baseline because this was the last ‘normal’ year of trade between the two nations before they started trading retaliatory tariffs,” explains AFBF.
AFBF further explains in 2017, the U.S. exported $20.8 billion in products covered by the agreement to China, implying in the year 2020, China would have to import $33.4 billion in U.S. agricultural products to meet terms of the agreement – a 60 percent increase over 2017 exports.
“The agreement also laid out total exports of U.S. agricultural products would equal $73 billion through 2020-21,” notes AFBF. “This is equivalent to $80 billion in Chinese imports once shipping and freight are factored in.”
Missed target, record exports
In their one-year analysis of the Phase One Trade Deal, AFBF points to data compiled by the U.S. Department of Agriculture (USDA) which states total exports of agricultural products covered under the agreement reached nearly $27 billion in 2020. This number indicated a 30 percent increase from 2017 numbers, equivalent to $6.5 billion.
“This, of course, means the export target of $33.4 billion was missed by over $6 billion,” explains AFBF in their report. “Put succinctly – we only got about halfway to the target of $12.5 billion over 2017’s export levels.”
Despite this missed target, 2020 saw record levels of agricultural exports covered in the agreement.
According to AFBF’s report, several products set new nominal export records to China, including pork at $2.1 billion, poultry at $761 million, tree nuts at $705 million, hay at $445 million, beef at $304 million, peanuts at $239 million and pulses at $51 million.
Corn and wheat also far exceeded 2017 levels, even though they didn’t set any records. In fact, $1.2 billion of corn was exported to China, which was 693 percent above 2017 levels, and $570 million of wheat was shipped to the country – 62 percent above 2017 levels.
Although 2020 U.S. agricultural exports reached record highs and the U.S. share of Chinese ag imports rebounded from very low levels, the U.S. still only has around 14 percent of China’s total ag import market of nearly $170 billion, according to AFBF.
“The missed target in 2020 will have implications for 2021, given the Phase One Trade Deal is a two-year commitment,” said AFBF, noting in order for China to hold up to their two-year $73 billion commitment, U.S. agricultural exports to China would need to reach $45.8 billion in 2021.
According to AFBF this would be equivalent to a nearly 69 percent increase in exports over 2020 levels and a 120 percent increase over 2017.
Hannah Bugas is the editor of the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.