Farm Progress

Branstad faces challenges in ChinaBranstad faces challenges in China

Former Iowa Gov. Terry Branstad, now ambassador to China, is representing a U.S. administration that’s threatening trade partnerships.

June 12, 2017

6 Min Read
CONNECTING: Former Iowa Gov. Terry Branstad intends to visit all of China’s provinces and talk with farmers while serving as ambassador. “I want to get to know and relate directly with farmers in China,” he says.

As keynote speaker at our annual spring meeting of the Wallaces Farmer Iowa Master Farmers in late March, Gov. Terry Branstad shared some insight about his nomination by President Donald Trump to be the next U.S. ambassador to China. The governor pledged to work to increase Chinese purchases of American products, particularly ag products, if confirmed as ambassador. He also told us how he and his family discussed and decided he should accept the nomination.

On May 22, Branstad was confirmed by the U.S. Senate, resigned as governor on May 24 and was immediately sworn in as ambassador to China. Then Lt. Gov. Kim Reynolds was sworn in as Iowa’s first female governor. I attended Branstad's final press conference as the nation’s longest-serving governor, and talked to him in an interview.

For Branstad, at age 70, it was the end of a five-decade career in Iowa politics and public life, and the beginning of a huge challenge as Trump’s emissary to China, a country entangled in a number of complicated issues with the U.S. and other nations.

Farm roots in Winnebago County
“It’s not an easy thing to leave a job you love,” said Branstad, a life-long Republican. “Never in my wildest dreams did I think a boy from a small farm in Leland, Iowa, would one day have the opportunity to represent my country and my state.”

Branstad was governor of Iowa for over 22 years. After earning a degree in political science at the University of Iowa, he was drafted and served as a military policeman in the U.S. Army. After his service, he earned a law degree from Drake University and then jumped into politics.

First elected to the Iowa House in 1972, Branstad won statewide election as lieutenant governor in 1978 and became governor four years later. He was governor for four consecutive terms between 1983 and 1999 and then won two more in 2010 and 2014. In the 12-year period between his tenures, he served as president of Des Moines University.

Branstad is now headed to Beijing to lead U.S. relations with the world’s most populous nation and second-largest economy amid several simmering political, security and economic challenges.

“As governor I saw firsthand the importance of a positive trade relationship between our two countries,” he said. “Nearly one out of every two rows of Iowa soybeans is sent to China, as well as $33.5 million worth of pork in 2016.”

He noted the importance of trade with China goes well beyond agriculture to aviation products, manufactured goods, electronics and other things. Branstad said he would work hard to represent the U.S. in other key issues with China, including concern over North Korea’s nuclear program and China’s human rights record.

Friendship with President Xi
Branstad has been to China six times, first in 1984. His friendship with Chinese President Xi Jinping is important. The two met in 1985 when Xi, then an official of Hebei Province, traveled to Iowa as part of an agricultural delegation and the relationship has grown. Xi eventually became president, and he still speaks fondly of Iowa and the hospitality he enjoyed here so many years ago. As ambassador, Branstad said he would use his unique position as friend of Xi and a trusted confidant of Trump to positively influence U.S.-China trade policy.

U.S. exports of ag products to China in 2016 were up nearly 6%, to $21.4 billion, compared to 2015, according to USDA. Canada spent $20.5 billion to buy U.S. ag products last year, and Mexico spent $17.9 billion. Those are the top three U.S. customers.

As Branstad noted, China has become the top destination for U.S. soybean exports, buying over $14 billion worth last year. China also buys a lot of pork, but sales haven’t been as consistent as soybeans. However, when they buy, it moves the market. Branstad said he will also work to open the market for U.S. beef in China. After banning imports of U.S. beef in 2003, China said earlier this year it would begin the process of reopening its borders.

Settling trade policy disputes
Another part of Branstad’s job will be settling trade disputes, such as getting Chinese approval to import GMO crops that are already approved in the United States. China in recent years has blocked shiploads of U.S. corn and dried distillers grain because they contained biotech traits not yet approved in China.

In mid-July, China and the U.S. are expected to announce results of the recent 100-day plan on trade. Already in this plan, the nations have announced agreement on 10 broad areas, including financial services, and a couple ag issues such as beef and biotech seed regulations. However, skeptical observers don’t expect much from this “early harvest.” China has promised similar lifting of trade restrictions in the past that didn’t pan out. This latest promise is partly tied to the U.S. agreeing to buy cooked chicken products from China.

Branstad will have a big job advocating for U.S. products and companies. Earlier this year China increased tariffs on ethanol from 5% to 30%, effectively shutting off ethanol exports to China. China also increased duties on distillers grain, the ethanol coproduct used as animal feed. China restricts biotech seed from companies such as DuPont Pioneer and Monsanto. China has a ban on some types of U.S. pork. The potential for more trade with China goes beyond ag, however. For example, Principal Financial Group, based in Des Moines, is seeking Chinese regulatory approval to offer 401(k) retirement accounts in China.

Rethinking TPP agreement
Branstad’s biggest potential victory on trade is not with Chinese leadership, but with his boss, Donald Trump. Will the new ambassador be able to persuade Trump to rethink his opposition to the Trans-Pacific Partnership? Branstad supported the 12-nation trade pact because he knew it would be good for Iowa agriculture and the U.S. economy. The TPP would also provide Branstad leverage in negotiating with the Chinese.

China benefits from the U.S. pulling out of the trade agreement. The TPP was intended, in part, to check China’s power in the Pacific region of the world. TPP isn’t dead. Its remaining members, such as Japan, Australia and Canada, are pushing ahead with the agreement, which would open markets. If the U.S. joins, China may eventually want to join, too, and agree to dismantle its protectionist policies. That would be a win-win for everyone.

With production of U.S. crops and meat rising and our government’s farm financial safety net headed for budget cuts, export demand from countries such as China are playing a growing role in the health of the U.S. farm economy. China, with its huge population and growing middle class, has emerged over the past decade as increasingly important and will continue in the foreseeable future. For more information, you can read a new study by Iowa-based Decision Innovation Solutions.

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