China, US reach agreement on beef, poultry and natural gas

Posted May 13, 2017

The US and China have announced agreements on trade in beef, poultry, natural gas and financial services in a deal highlighting the surprisingly good relations which have been fostered between the leaders of the two super powers.

The agreement will see the two countries expand trade of beef and chicken, as well as increase access for financial firms. Cheniere said on Friday it has had extensive negotiations with Chinese state-owned companies about increasing USA shipments of LNG to China.

"It was pretty much a Herculean accomplishment to get this done", Commerce Secretary Wilbur Ross told reporters during a hastily scheduled press conference in the White House briefing room.

America's trade deficit in goods and services with China totaled $310 billion past year, by far the largest imbalance with any country.

But trade experts questioned the magnitude of the deal.

China is to issue bond underwriting and settlement licenses to two qualified USA financial institutions by July 16.

But now the United States and China have agreed a 100-day action plan as part of their "comprehensive economic dialogue" in an apparent change of tone from the President.

The administration tried to raise a number of these issues with the Chinese, who "took those all off the table right out at the outset", a US business source said. Previous administrations have hailed market-opening agreements only to be left disappointed.

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The two sides didn't discuss whether the USA would join the Asian Infrastructure Investment Bank, Ross said. "American companies, workers, farmers and more are eager for more access to Chinese markets, and they'll look to ensure reality matches the rhetoric of these promises".

Trump railed against that deficit during his campaign and vowed to reduce it as President. He's argued that America's perennial trade deficits have cost millions of factory jobs and pledged to take a tougher stance in trade negotiations to lower the imbalances.

Potential cooperation between the United States and China on LNG would not have any immediate impact on supplies, as China now does not need new gas supplies and the United States is not yet able to deliver more.

This is "a very big change", said Ross, noting China is trying to wean itself off coal at a time "it doesn't produce enough natural gas to meet its needs".

The Chinese authorities imposed an import ban on USA beef in 2003, following a case of BSE in Washington State, although this was lifted a year ago.

By no later than 16 July, American beef producers will have full access to export to the Chinese marketplace of 1.4 billion people; both countries will also work together to allow imports of cooked Chinese chicken. While Trump and his administration still complain about the US' $300 bn trade deficit with the country, the new agreement shows how Trump has adopted a less confrontational tone with Beijing. The deficit with China represented about 60 percent of the country's total deficit past year of $500.6 billion.

"As you can appreciate, this addresses 10 items", Ross said of the initial agreements.

US President Donald Trump had previously urged China to do more to rein in the actions of the North in exchange for favourable trade policies. Further, as concrete progress is made in implementing the actions under the 100-day plan, the two sides will begin discussing a one-year plan to further solidify actions in promoting U.S.