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Serving: United States

Vilsack discusses complexity of Chinese ag trade relationship

China and U.S. battling on trade.
Expanding agricultural markets as well as upholding trade commitments with China and Mexico important for U.S. agriculture.

As part of the Biden administration’s Build Back Better Plan, Secretary of Agriculture Tom Vilsack says that means transforming the food and agriculture system to a different system for farmers that creates better markets, more markets and new markets. And with two of the largest markets – China and Mexico – it also includes holding them accountable to the trade deal commitments.

While speaking at an event hosted by the National Press Club Friday afternoon, Vilsack says the U.S. is still committed to expanding export opportunities for U.S. agriculture.

“We think there’s tremendous opportunity for the United States to have sales overseas,” Vilsack says. “And we think there are a lot of market opportunities that we are currently looking at and the key here is deepening our presence in all of those markets by having more people on the ground, understanding those markets, making sure that we’re working with our collaborators, and developing partnerships and promotions in those export markets so that we can sell more products overseas.”

Chinese relationship important for ag producers

Vilsack notes that commodity prices have increased, partly because of China’s increased purchases. He says he will keep his focus on whether China will meet their Phase One responsibilities.

Vilsack noted there are many segments that could see additional purchases by China including purchases of biofuels, dry distillers grains and dairy. Meanwhile, corn and soybeans and some other commodities have reached levels likely comparable to pre-tariff, pre-pandemic amounts.

“I think the relationship with China is very complex,” Vilsack says. “So, there is conflict, in some cases there is competition. And in some cases, there is cooperation.”

Related: China falls short of Phase 1 goals

He says the overall market share of U.S. agricultural products going into China has suffered as a result of the trade and tariff war. “Prior to the tariffs assessed by the Trump administration, we had about 25% of their market. Today, it’s about 15%.”

Vilsack says he raised this with his counterpart in China, but it’s incumbent upon the U.S. to make the case to continue to press China’s responsibilities under Phase One and to continue to have China look to the U.S. for a high quality, safe and stable product from the U.S.

“We clearly have a trading relationship that's important to U.S. agriculture. We obviously want to maintain that relationship,” Vilsack says. “The fact is they need us; they may not like that. They may not want to have to acknowledge that. But at the end of the day, they can't grow enough unlike the United States to feed their own people. They need the import of food, and they can't necessarily import it from other sources without including the U.S.”

During President Joe Biden press conference Thursday, Biden discussed the ongoing trade relationship with China President Xi Jinping.

When first being elected, Biden said he spoke with President Xi for two hours. He said they made several things clear to one another. “I made it clear to him again what I’ve told him in person on several occasions: that we’re not looking for confrontation, although we know there will be steep, steep competition.

“Two, that we’ll have strong competition but we’ll insist that China play by the international rules: fair competition, fair practices, fair trade,” Biden says.

Earlier this month Biden met with allies and discussed how to hold China accountable in the region: Australia, India, Japan, and the United States — the so-called Quad. “Because we have to have democracies working together,” Biden says. “I’m going to invite an alliance of democracies to come here to discuss the future. And so we’re going to make it clear that in order to deal with these things, we are going to hold China accountable to follow the rules — to follow the rules — whether it relates to the South China Sea or the North China Sea, or their agreement made on Taiwan, or a whole range of other things.”

Biden says he sees stiff competition with China. “China has an overall goal, and I don’t criticize them for the goal, but they have an overall goal to become the leading country in the world, the wealthiest country in the world, and the most powerful country in the world. That’s not going to happen on my watch because the United States are going to continue to grow and expand.”

Mexico trade dispute

A main trade concerns has risen in recent months regarding the Mexican government’s decree in December 2020 stating the intention to phase out the use of glyphosate and use of genetically modified corn for human consumption. Concerns have existed if the government also bans its use in feed use as Mexico is the largest importer of corn and corn products from the U.S.

Based on Vilsack’s conversations with his counterpart in Mexico, the importation restrictions only relate to corn used for food products. It is a significant difference, and Vilsack recognizes it as one that makes a big difference to producers here in the United States.

Related: Growing concerns expressed over Mexico’s trade actions

Vilsack has had conversations with U.S. Trade Representative Ambassador Katherine Tai. “She is well aware of the concern. She has had recent conversations with her counterpart and issues are being raised,” he explains.

The U.S. Mexico Canada Agreement does allow for dispute mechanisms if the ongoing conversations fail to provide a resolution.

“There are processes that could potentially be used. We’re not anywhere there yet,” Vilsack says. “I think it is important to distinguish between what Mexico is currently thinking about doing, and the fact that it’s not going to have as great an impact as it would if it was everything all at once, all now.”

 

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