The U.S. and China have reached a "phase one" trade deal that takes additional escalation of tariffs by both countries off the table but is lacking specifics on when existing tariffs U.S. fresh produce and other agricultural commodities will be removed.
The Office of the U.S. Trade Representative said Dec. 13 that the agreement requires structural reforms to China’s economic and trade rules in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.
The deal also has a commitment by China, according to the USTR, that it will make substantial additional purchases of U.S. goods and services in the coming years.
Richard Owen, vice president of global membership and engagement for the Produce Marketing Association, said in a Dec. 13 e-mail that the deal is a good sign that trade relations are thawing of trade relations between the two countries.
"It's encouraging news to the industry that the U.S. president will not implement an additional round of tariffs on $160 billion worth of Chinese goods that was scheduled to go into effect on Dec. 15," Owen said. In addition, the U.S. will cut in half the 15% tariff that was applied on $120 billion of Chinese goods implemented during the second wave of increases earlier this year.
In exchange for those moves, Owen said the U.S. has reportedly asked that China commit to purchasing an additional $50 billion of U.S. agricultural products annually, although that has not yet been confirmed by China.
"PMA would like to see U.S. fresh produce included in the Chinese purchase commitments," Owen said.
However, the discouraging part of the announcement is that the tariffs imposed by China do not appear to be addressed in the phase one agreement, he said. "PMA would like to see all tariffs removed from U.S. fresh produce exported to China," he said. "The tariffs currently in place by China range from 10% on frozen vegetables and fruit juices, up to 50% on fresh apples, cherries, oranges, grapes and plums," he said.
The dispute with China had its beginning on May 10 last year, when President Trump increased duties on $200 billion worth of Chinese products from 10% to 25%. China retaliated in July last year with 40% retaliatory tariffs put in place against apples, cherries, pears and other commodities in response to U.S. Section 232 steel and aluminum tariffs and Section 301 tariffs based on technology transfer concerns. That was in addition to an already existing 10% tariff.
U.S. fresh noncitrus fruit exports to China from November 2018 to October 2019 totaled $110.3 million, down 18% from $122.2 million in 2018 and 44% down from $177 million in 2017.
U.S. fresh citrus exports from November 2018 to October 2019 totaled $23.7 million in 2019, down 61% from $60.5 million in 2018 and 57% down from $54.5 million in 2017.
U.S. imports of fruits and vegetables from China are also down because of tariffs imposed by the U.S.
China's fresh vegetable exports to the U.S. from November 2018 to October 2019 totaled $118 million, down 12% from the previous year. China's exports of fresh or frozen fruit to the U.S. from November 2018 to October 2019 were $18 million, down 48% compared with the previous year.