US-China trade deal: Landmark agreement beefs up livestock trade

25 Mar 2020 --- The US Department of Agriculture (USDA) and the Office of the US Trade Representative (USTR) have announced continued progress in the implementation of the agriculture-related provisions of the US-China Phase One Economic and Trade Agreement. The Agreement entered into force on February 14, is proving highly favorable for livestock traders. In particular, trade with China in beef is pegged by the USDA as a fast-growing market that imported US$8.4 billion worth of beef products in 2019. Meanwhile, the government agency underscores new opportunities in grain trade following China’s newly updated list of US facilities eligible for export.

“These steps show that China is moving in the right direction to implement the Phase One agreement,” says US Secretary of Agriculture Sonny Perdue. “We will continue to work with China to ensure full implementation of its commitments and look forward to seeing further improvement and progress as we continue our ongoing bilateral discussions.”

Click to EnlargeUS beef producers, for the first time since 2003, will have access for nearly all beef products into China. Under these new developments, the two countries have signed a regionalization agreement that – in the event of a detection of highly pathogenic avian influenza or virulent Newcastle disease in a particular region of the US – will allow US poultry exports from unaffected regions of the country to continue. This action will help protect the increased access to the Asian poultry market, following the lifting of China’s four-year ban on US poultry imports. US poultry exports have the potential to exceed US$1 billion per year, reports the USDA.

US beef producers, for the first time since 2003, will have access for nearly all beef products into China. US pork producers will also be able to significantly expand the types of pork products shipped to China. As per the Agreement, China expanded its internal list of US beef and pork products eligible to enter its ports, including processed meat products. 

On the beef and beef products list, China removed all references to age restrictions, in line with its February 24 announcement that conditionally lifted restrictions on beef and beef products from cattle aged 30 months and older. USDA estimates that American cattlemen could export up to US$1 billion per year under this improved trading environment. 

Bumping up grain exports 
China’s list of US facilities eligible to export distillers dried grains with solubles (DDGS) has additionally been updated. In 2015, US producers reported exports of US$1.6 billion worth of DDGS to China. The aforementioned action, if coupled with the removal of other trade barriers, will allow US exporters to recapture this market.

Meanwhile, the US Food and Drug Administration (FDA) published a notice to facilitate the registration of animal feed manufacturing facilities for export to China. In response to delays caused by the COVID-19 outbreak, China announced a streamlined process for registering new US feed products for export.

In addition, China’s tariff exclusion process is in effect, and many importers report that they are receiving tariff relief for purchases of US food and agricultural products. USDA continues to publish guidance for US exporters seeking to participate in this process.

“We are working with China on a daily basis as we implement the Phase One trade agreement,” US Trade Representative, Ambassador Robert Lighthizer says. “We recognize China’s efforts to keep the commitments in the agreement and look forward to continuing our work together on trade matters.”

Edited by Benjamin Ferrer

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