The U.S. continues to build its advantage in the massive Chinese market for meat and other agri-food commodities.
This morning, the U.S. government announced “continued progress” in the U.S.-China Phase One trade agreement. The progress includes new rules for American chicken producers and more access for U.S. beef, pork and animal feed exporters.
For instance, nearly 1,000 beef and pork facilities in America can now ship product to China.
“China (has) published an updated list of 938 U.S. beef and pork establishments eligible to export to China,” the U.S. Department of Agriculture and the Office of the U.S. Trade Representative said in a statement.
“The USDA Food Safety and Inspection Service export library has been updated to reflect these changes.”
In addition, China and the U.S. have worked out a deal on avian influenza for chicken exporters. If bird flu hits chicken or turkey farmers in a certain region of the U.S., producers in other parts of America can still export poultry meat to China.
“This action will help protect the increased access American farmers have gained in China’s poultry market,” the USDA and USTR said.
“U.S. poultry exports have the potential to exceed $1 billion per year.”
— USTR (@USTradeRep) March 24, 2020
That’s not a threat to Canada because Canadian farmers don’t export chicken or turkey, but the new rules for beef and pork could impact Canadian producers and processors.
U.S. beef producers now have few restrictions on beef exports into China.
“China removed all references to age restrictions, in line with its Feb. 24 announcement that conditionally lifted restrictions on beef and beef products from cattle aged 30 months and older,” the USDA and USTR said.
“(The) USDA estimates that American cattlemen could export up to $1 billion per year under this improved trading environment.”
Some market analysts believe the reduction of non-tariff trade barriers for America’s ag industry is a genuine threat to Canada.
For years, China has used sanitary and phytosanitary (SPS) regulations on agri-food as a geo-political weapon or to keep out unwanted products, as needed.
The Phase One deal curtails China’s use of non-tariff trade barriers — at least on American agri-food exports, said Carlo Dade, a director of the Trade & Investment Centre with the Canada West Foundation.
He believes U.S. farmers now have “structural” advantage in the Chinese market.
“The Americans have taken 15 years of being frustrated with non-tariff barriers … and the manipulation of rules by China and have applied that learning to constrain China, and to keep China from doing that to American exporters,” he said in late February.
“The 121-123 specific concessions that the Americans got, 51 … are hyper-specific.”
Other analysts think China will continue to purchase huge quantities of meat from countries like Canada because they have no choice.
In the last year or so, African swine fever has decimated China’s hog herd, and 40 percent of the country’s sow herd may be gone. That’s forced China to ramp up imports of pork, beef, chicken and all forms of protein.
“They will continue to be very, very short of pork,” Brett Stuart, president of Global AgriTrends, said at the Banff Pork Seminar in January.
“With a market of this scale, any reduction in self-sufficiency means imports are going to be huge for years and years to come.”
However, non-tariff trade barriers remain a risk for Canadian agri-food exporters. If Canada’s government was to take a stand on human rights for Uighurs, a minority in China, the Chinese government could retaliate with sanitary and phytosanitary restrictions.
Guy Saint-Jacques, who served as Canada’s ambassador to China from 2012-2016, witnessed many similar actions during his time in Beijing.
“With China … I’m always skeptical when they (use) phyto-sanitary reasons,” he said.
“I lived 13 years in China, I’ve seen all kinds of (things) in terms of dirty tricks.”
China and the U.S. reached a Phase One agreement in January as part of a pathway to a comprehensive trade deal. China has agreed to ramp up purchases of U.S agricultural commodities, possibly buying $32 billion more in the next two years (2020 and 2021).