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Ag Industry Stands to Benefit from U.S., China Trade Agreement
USAgNet - 01/15/2020

The first phase of a new trade agreement between the United States and China is scheduled for a White House signing ceremony Wednesday and many in the agriculture community are hoping the deal will bring some relief to the farm economy.

The Phase One agreement will begin to resolve the nearly two year exchange of tariffs the two countries have levied on each other's goods--the United States in an attempt, the Trump administration says, to pressure China to reform some of its trade policies and China in retaliation.

The result for farmers was a steep decline in sales to China for many products, especially soybeans.

The Phase One deal will rescind some, but not all, of the tariffs and calls upon China to increase its imports. But for now, most details of the agreement have not been made public and Wendong Zhang, an Iowa State University economist, says the Chinese have not been particularly forthcoming with what they're agreeing to.

Zhang offers as an example that he can't find any confirmation as to whether China's promise to purchase between $40-50 billion in U.S. agricultural products is for one year, which would be a huge increase over 2017, or if it's for two years.

Despite considerable hype around the planned signing ceremony, some farmer advocates remain skeptical. Farmers for Free Trade issued a statement saying the failure to publicly release the full text of the Phase One agreement has heightened its concerns about what's in the deal.

If the Chinese resume purchases of farm goods, then the federal government won't need to make additional payments under the Market Facilitation Program, which shelled out nearly $11 billion to farmers to make up for lost sales, Grassley said. He didn't have any official word about the Market Facilitation Program's future, but said common sense would dictate there wouldn't need to be future payments if trade gets back on track.

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