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China puts water on the trade agreement announced by Trump

China puts water on the trade agreement announced by Trump

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After 18 months of commercial war it seems that the United States and China have closed the first phase of an agreement. This was announced on Friday by Donald Trump and for a few hours it seemed that the end of this dispute that has kept the world and markets in suspense was very close. But immediately the doubts surfaced.

This first pact includes the premise that China will spend 50,000 million a year on US agricultural products. Trump assured with confidence that the Asian giant “will reach the goal very soon.”

On the other hand, its commercial representative, Robert Lighthizer, although he emphasized the jump that this agreement would mean for China in terms of the level of its imports, refused to be very specific with the data, according to Bloomberg. And, while the United States proudly told the world how they advanced in the negotiations, China refused to answer questions about its exact commitment to fulfill this pact.

US Secretary of Agriculture Sonny Perdue said Thursday that China had claimed to buy agricultural products worth between 40,000 and 50,000 million dollars, but was reluctant to commit to contracts. In this regard, the commercial representative suggested Friday at a press conference that the highest figure is “aspirational.”

Lighthizer explained that the idea was for China to increase its annual purchases of US agricultural products by 40,000 million over the next two years and to try and put all of it began that that figure could reach 45,000 million per year.

Now China is studying whether it can reach the amount imposed by the tycoon without paying prices higher than those in the market. “He will not buy agricultural products from US producers to meet the objective if he can buy them for less than competitors like Brazil,” an anonymous source who knows the facts has assured Blooomberg.

Trump seeks to please the rural world for reelection

This Trump requirement is aimed at increasing enthusiasm for the agreement in rural areas of the United States. It is a key political constituency for the president while campaigning for re-election.

According to the magnate, the annual purchase of Beijing would be more than double the 24 billion dollars in agricultural products that China imported in 2017, a year before the commercial war began. The largest amount that the Asian country has come to buy from US producers was $ 29 billion in 2013, a figure that is well below what the United States now demands.

Brazil as an alternative

At the time when Trump announced this pact, the price of soybeans and pork increased markedly, although later the US producers had to step back as a precaution. And it is that Brazil is also an important agricultural supplier of the Asian country.

In fact, if China makes the leap in soy purchases in the United States, the relationship with the South American country could break down and end in a new trade dispute between Brazil and China. This was stated by Joseph Glauber, former chief economist of the United States Department of Agriculture and a member of the International Food Policy Research Institute.

While US exports of pork and possibly poultry and veal could increase as a result of the swine fever epidemic, US exports of pork worldwide worldwide last year only amounted to about 6.4000 thousand million dollars, notes Bloomberg.

“A 50% increase to that total would only add about 3.2 billion dollars. And anyway, it could increase meat prices for American consumers,” Glauber said.

For the former chief economist, the Chinese are also not likely to reach that level of purchase through products such as corn, sorghum, dried distilled grains and ethanol. Total US exports of corn, soybeans, veal and pork worldwide averaged only 44.2 billion dollars between 2014 and 2018.

The president of the American Farm Bureau Federation, Zippy Duvall, said in a statement that the organization is “eager to know the details of China’s commitment to buy more agricultural products.” We will have to wait to see the level of commitment of the Asian country before ensuring that the end of the trade war is approaching.

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