Tag Archives: China

Outside of its origins on the African continent, African swine fever (ASF) continues its relentless march through parts of Asia and Europe, causing increasing disruption to the world’s pork production. Much of the world’s attention has been on China due to its No. 1 position in global pork production. The World Organization for Animal Health (OIE) now reports that nearly all of China’s provincial level administrative units (see heat map) have reported one or more ASF breaks, which means all but the far west (and Hong Kong and Macau) of China now has some level of ASF exposure.

Official reports peg China’s losses to culling and mortality at about one million pigs since the outbreak was reported last August. However, unofficial reports put that number as much as 10 times that amount. According to economist Steve Meyer with Kerns and Associates, China’s breeding herd is down 19 percent from one year ago and total market hogs are down 16 percent from a year ago. This has greatly hindered China’s ability to feed its population pork, which it typically desires. This could be a driver behind the recent largest purchase of U.S. pork by China in two years despite the self-imposed tariffs.

Non-governmental reports from U.S. pork industry visitors cite China’s ASF as “endemic,” meaning fleeting hope of containment or eradication anytime in the near future. This is further evidenced by the recent confirmation of the ASF virus in neighboring Vietnam, where it has been confirmed in 17 provinces in the northern part of the country. Other pig-raising countries nearby with growing levels of concern include Thailand, whose pork industry is worth $3.3 billion a year and is considered the region’s most advanced. By some estimates, up to 80 percent of Thai pork is raised on large farms, which should improve biosecurity. However, neighboring countries are typically less sophisticated in their pig-rearing abilities.

 

Imports of canola, a Canadian oilseed crop, will now undergo more thorough inspections in China, the country’s customs agency said Thursday, amid what appears to be a retaliatory move amid a diplomatic row over the arrest of a Chinese executive.

Relations between Canada and China have been tense since December, when Canada arrested Chinese tech executive Meng Wanzhou in Vancouver at the request of the U.S. China warned of “grave consequences” if Canada did not immediately release Meng Wanzhou, the chief financial officer of Huawei.

U.S. prosecutors have filed charges accusing Meng, who is the daughter of Huawei’s founder, of lying to banks about dealings with Iran. Huawei denies any wrongdoing.

Apparent targets of China’s ire have included two Canadians detained on suspicion of harming national security, a third Canadian sentenced to death, and now the Canadian staple canola.

Canola is grown in China, Japan and many other countries.

However, the website for the Canola Council of Canada calls the crop “Canada’s greatest agricultural success story” and the world’s only “Made in Canada” crop. According to the Canola Council, canola was developed by Canadian researchers using traditional plant breeding techniques, resulting in a bright yellow variety of rapeseed whose seeds can be harvested for vegetable oil.

China’s customs administration said in a statement posted to its website Thursday that four customs offices in China found pests such as fungal pathogens in canola imports. It confirmed that it revoked the export permit held by Richardson International Ltd., one of Canada’s largest grain processors.

The agency said stronger inspections and lab testing while canola imports are in quarantine were needed.

Canadian Agriculture Minister Marie-Claude Bibeau said in a statement Wednesday that the Canadian Food Inspection Agency conducted investigations after China issued notices of non-compliance on canola seed imports, including nine since January. She said the agency had not identified any pests or bacteria of concern.

China buys about 40 percent of Canada’s canola exports, and the revocation of Richardson’s permit hurts the entire chain of industries involved in the market, the Canola Council of Canada said.

Meanwhile, the dispute centered on Huawei is simmering.

Huawei announced Thursday that it is challenging a U.S. law that labels it a security risk and would limit its access to the American market for telecom equipment.

BEIJING (AP) — China is blocking some imports of the agricultural product canola from Canada due to fears of insect infestation, the foreign ministry said Wednesday.

The move comes amid a conflict between the countries over Canada’s arrest of a Chinese technology company executive and is seen by some as a new tactic to achieve leverage over Ottawa.

China acted to suspend canola imports from a Canadian company “in accordance with laws and regulations and international practice,” Foreign Ministry spokesman Lu Kang said at a daily news briefing.

Lu cited “harmful organisms” he did not further identify as a threat. He said China’s government “needs to protect the health and safety of its own people.”

“I can tell you responsibly that the Chinese government’s decision is definitely well-founded. Upon verification, China customs has recently detected dangerous pests in canola imported from Canada many times,” Lu said.

One of Canada’s largest grain processors, Richardson International Ltd., said Tuesday that China had revoked its permit to export canola there.

Some saw that as retaliation for Canada’s arrest of a top executive for the Chinese tech giant Huawei.

Canada is proceeding with an extradition hearing for Huawei CFO Meng Wanzhou, who is the daughter of Huawei’s founder. She was arrested by Canada at the request of the U.S., where she is wanted on fraud charges for allegedly misleading banks about the company’s dealings with Iran.

China has a history of using trade measures to retaliate over perceived political slights. It suspended its bilateral trade deal with Norway and restricted imports of Norwegian salmon after the Nobel Peace Prize was awarded to Chinese political prisoner Liu Xiaobo in 2010.

Britain and other countries were also retaliated against over meetings with the Tibetan spiritual leader the Dalai Lama, considered a dangerous separatist by Beijing.

Canadian Agriculture Minister Marie-Claude Bibeau said in a statement that the Canadian Food Inspection Agency conducted investigations after China issued notices of non-compliance on canola seed imports, including nine since January. She said the agency had not identified any pests or bacteria of concern.

China receives about 40 percent of Canada’s canola exports, and the revocation of Richardson’s permit hurts the entire value chain of industries involved in the market, the Canola Council of Canada has said.

Canola prices already have been hit by China’s retaliatory tariffs on U.S. agricultural exports. Further cutbacks on Chinese buying would deal a major blow to what is a lifeline for agriculture in western Canada.

“We are working very, very hard with the Chinese government on this issue,” Canadian Foreign Affairs Minister Chrystia Freeland said Tuesday.

China has warned of serious consequences if the Huawei executive is not released. China arrested two Canadians on Dec. 10 in what was widely seen as an attempt to pressure Canada.

After Meng’s arrest, a Chinese court also sentenced a Canadian to death in a sudden retrial, overturning a 15-year prison term handed down earlier.

DES MOINES, Iowa (AP) — U.S. Secretary of State Mike Pompeo was on a trade mission Monday to persuade Iowa farmers struggling to survive low commodity prices and tariffs that have hurt sales to stand firm with President Donald Trump and his efforts to negotiate better trade deals.

Pompeo, flanked by U.S. Ambassador to China and former Iowa Gov. Terry Branstad, spoke to a group of young suburban Des Moines Future Farmers of America members at a high school in Johnston, Iowa and a gathering of 200 Iowa Farm Bureau members. He toured a DowDuPont agricultural research facility and met with the state’s Republican Gov. Kim Reynolds who has been supportive of Trump.

During questions at the high school he defended Trump’s trade efforts which have yet to resolve an ongoing tariff dispute with China that has cost farmers billions of dollars in lost trade, saying the its protectionist policies of charging tariffs on U.S. goods and stealing U.S. technology had to be dealt with.

“The president concluded, and I think rightly so, that it’s time. We need to be serious about that. That we ought to do this in a professional way, engage in deep communication and negotiation with the Chinese about this so we can get to a place where Americans can sell their goods on a fair, simple reciprocal idea that says if you have no tariffs and we’ll have none,” he said.

He acknowledged such fights are difficult but suggested there could be a resolution, telling the farmers that “help is on the way for American producers and Chinese consumers.”

China is the leading buyer of U.S. soybeans and as recently as 2017 had been the leading buyer of coarse grains, second leading buyer of cotton, third leading buyer of dairy and top five buyer of other agricultural products, he said.

He also acknowledged to the group of Iowa students that negotiations with North Korea fell short and there’s a lot more work to do to convince the nuclear power to change course.

“We made some progress. We didn’t get to where we hoped we’d be and I think there’s a lesson in that and I think there’s a lot more work to do there,” Pompeo told the FFA students.

He said the threat to the United States and the next generation of Americans from the North Korean nuclear weapons is a serious threat.

“My mission as America’s top diplomat is to try and convince them that they don’t need their nuclear weapons; that they ought to change strategic course. They ought to begin to give up those weapons systems in a way that will allow the North Korean people to flourish and reduce the risks here in America.”

Branstad said he believes progress had been made recently with China and a deal could be near but he acknowledged farmers want a resolution.

“Iowa farmers take the long view of things. I think Iowa farmers want to see something long-lasting and permanent and not something that’s just going to be short term,” he said.

The World Trade Organization found that China exceeded its agreed-on limits for government subsidies on multiple crops. Politico notes that U.S. Trade Representative Robert Lighthizer says the case could indeed become part of the negotiations and hoped-for trade deal with China.

Lighthizer says there’s another WTO challenge in process that targets how China administers its import quotas on multiple agricultural products. Lighthizer told the House Ways and Means Committee last week that they’re trying to resolve those issues with China within the context of a potential agreement. White House Chief Economic Adviser Larry Kudlow told CNBC that the outlook for a deal with China is “very positive.” That’s a different outlook than the one Lighthizer had during testimony to the Ways and Means Committee in which he said, “there’s still substantial work that needs to be done.”

President Trump did say last week that they’ve made “major progress” in talks with China but also acknowledged the possibility things could still collapse. During a press conference in Vietnam, Trump said, “I’m never afraid to walk away from a deal. I would do that with China, too, if it didn’t work out.” Also, on the trade front, the Trump Administration published its key objectives for a potential agreement with the United Kingdom, the first step in the process of beginning trade negotiations.

The World Trade Organization found that China exceeded its agreed-on limits for government subsidies on multiple crops.

Politico notes that U.S. Trade Representative Robert Lighthizer says the case could indeed become part of the negotiations and hoped-for trade deal with China. Lighthizer says there’s another WTO challenge in process that targets how China administers its import quotas on multiple agricultural products.

Lighthizer told the House Ways and Means Committee last week that they’re trying to resolve those issues with China within the context of a potential agreement.

White House Chief Economic Adviser Larry Kudlow told CNBC that the outlook for a deal with China is “very positive.” That’s a different outlook than the one Lighthizer had during testimony to the Ways and Means Committee in which he said, “there’s still substantial work that needs to be done.”

President Trump did say last week that they’ve made “major progress” in talks with China but also acknowledged the possibility things could still collapse. During a press conference in Vietnam, Trump said, “I’m never afraid to walk away from a deal. I would do that with China, too, if it didn’t work out.”

Also, on the trade front, the Trump Administration published its key objectives for a potential agreement with the United Kingdom, the first step in the process of beginning trade negotiations.

U.S. Trade Representative Robert Lighthizer and Secretary of Agriculture Sonny Perdue announced today that a World Trade Organization (WTO) dispute settlement panel found that China has provided trade distorting domestic support to its grain producers well in excess of its commitments under WTO rules.  China’s market price support policy artificially raises Chinese prices for grains above market levels, creating incentives for increased Chinese production of agricultural products and reduced imports.

This panel report is a significant victory for U.S. agriculture that will help American farmers compete on a more level playing field.  This dispute is the first to challenge China’s agricultural policies that disregard WTO rules and shows that the United States will take whatever steps are necessary to enforce the rules and ensure free and fair trade for U.S. farmers, ranchers, workers, and businesses.

“The United States proved that China for years provided government support for its grain producers far in excess of the levels China agreed to when it joined the WTO.  China’s excessive support limits opportunities for U.S. farmers to export their world-class products to China.  We expect China to quickly come into compliance with its WTO obligations,” said Ambassador Lighthizer.

“We know that America’s farmers and ranchers thrive in a market-oriented, rules-based global economy.  That means all countries must play by the rules, which is why this finding is so important to U.S. agriculture,” said Secretary Perdue.

 

Background:

In December 2016, USTR requested that the WTO establish a dispute settlement panel to consider whether China provides “market price support” for Indica (long-grain) rice, Japonica (short- and medium-grain) rice, wheat, and corn in excess of China’s domestic support commitments.  Market price support programs are some of the most trade-distorting agricultural policies, and are therefore subject to clear limits under the WTO Agreement on Agriculture and a WTO Member’s specific commitments.  Under WTO rules, China may provide non-exempt support up to the de minimis level of 8.5 percent of the value of total production of a particular commodity, a commitment set out in China’s WTO accession agreement.

The panel report agreed with the United States that China provided domestic support to its agricultural producers in 2012, 2013, 2014, 2015, well in excess of its WTO commitments.  Specifically, the panel found that China had provided support in excess of permitted levels for Indica (long-grain) rice, Japonica (short- and medium-grain) rice, and wheat, in every year.  Each finding individually established that China broke its overall agricultural domestic support commitment for agricultural producers.  For corn, the panel declined to make findings on the support provided to corn in 2012-2015 given that China had apparently changed its program in 2016, just prior to the WTO’s establishment of the panel.

Compliance with WTO rules will lead to a reduction in the excessive support provided to China’s grains producers and should increase market forces in China, leading to a more level playing field.

WASHINGTON (AP) — President Donald Trump said Sunday he will extend a deadline to escalate tariffs on Chinese imports, citing “substantial progress” in weekend talks between the two countries.

Trump tweeted that there had been “productive talks” on some of the difficult issues dividing the U.S. and China, adding that “I will be delaying the U.S. increase in tariffs now scheduled for March 1.”

Trump said that if negotiations progress, he will meet with Chinese President Xi Jinping at his Florida resort to finalize an agreement.

U.S. and Chinese negotiators met through the weekend as they seek to resolve a trade war that’s rattled financial markets.

Trump had warned he would escalate the tariffs he has imposed on $200 billion in Chinese imports, from 10 to 25 percent, if the two sides failed to reach a deal. The increase was scheduled to take effect at 12:01 a.m. EST on March 2.

The reprieve is likely to be greeted with relief by financial markets.

The world’s two biggest economies have been locked in a conflict over U.S. allegations that China steals technology and forces foreign companies to hand over trade secrets in an aggressive push to challenge American technological dominance.

The two counties have slapped import taxes on hundreds of billions of dollars of each other’s goods. The conflict has unnerved investors and clouded the outlook for the global economy, putting pressure on Trump and Xi to reach a deal.

“Trump clearly wants a deal and so do the Chinese, which certainly raises the probability that the two sides will come to some sort of negotiated agreement, even if it is a partial one, in the coming weeks,” said Cornell University economist Eswar Prasad, former head of the International Monetary Fund’s China division.

On Twitter, Trump said the two sides had made headway on issues including protection of trade secrets, forced technology transfer and U.S. agricultural sales to China. But the administration did not immediately provide details.

Business groups and lawmakers in Congress want to see a comprehensive deal that forces the Chinese to change their behavior and that can be enforced. The U.S. has accused China of failing to meet past commitments to reform its economic policies.

“Encouraging news from @POTUS that progress is being made in a trade deal with China. Hopefully this leads to an agreement that stops China’s theft of US intellectual property and avoids a full blown trade war,” tweeted Republican Sen. Pat Toomey of Pennsylvania

But critics worry that the president has given up leverage. “They now have lost the advantage of a deadline,” said Philip Levy, a senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush, adding that “I see the odds tilting” in China’s favor.

China is proposing additional purchases of U.S. agriculture products of $30 billion a year in trade talks with the United States. Bloomberg reports the offer would be on top of pre-trade war levels and continue for an undefined period of time. Agriculture Secretary Sonny Perdue told reporters Thursday it was “premature” to comment on the proposal, adding he didn’t want to raise expectations.

But, if an agreement is reached, Perdue says the U.S. structural reforms can “recover markets very, very quickly.” The proposal is part of the talks between trade officials from the U.S. and China taking place in Washington, D.C. this week. In response, Arlan Suderman of INTL FCStone, expressed caution, noting “China will say what needs to be said to get a deal, but the key component will be in the verification and enforcement.” The talks face a March 1 deadline, although President Trump has recently suggested he would consider extending the deadline.

A new report out from the National Bureau of Asian Research warns the Trump Administration to temper its expectations on China significantly changing its economic policies.

The bureau says China can’t make deep structural reforms to its economy in the 10 days before the March 1 deadline to produce a trade deal. The report says the better strategy may be to keep tariffs on Chinese goods in place, potentially for years.

The bureau also wants the U.S. to work with allies like the European Union and Japan to crank up international reform pressure on Beijing. “We don’t think inflicting collateral damage on the U.S. economy is a good thing,” says former Louisiana Representative Charles Boustany, one of the co-authors of the report. “All we’re saying is hold the line for now on tariffs, short of any kind of major breakthrough.” The report’s authors say a good idea in the interim is to work on what they call “interim agreements.” An example would be the Chinese lifting tariffs on U.S. farm goods in exchange for Trump removing tariffs on Chinese electronic goods.