Chinese officials visit ISA, talk trade04/12/2018 | Soybean News
By Matthew Wilde, ISA senior writer
A Chinese diplomat earlier this week asked Iowa Soybean Association (ISA) officials to help avert a trade war between his country and the United States.
Hong Lei, consul general of The People’s Republic of China in Chicago, wants ISA leaders to stress the importance of trade, particularly soybeans, to the U.S. government. He hopes that will convince the U.S. to negotiate with China so punitive tariffs from both countries can be avoided.
China and the United States are engaged in a trade dispute resulting in escalating tariffs, which include agricultural products, and rhetoric that could hurt both economies.
“We sincerely hope our friends at ISA will make a strong effort to ward off the severe consequences that would come from a trade war,” Lei said.
The head of China’s regional consulate, along with two staff members, visited the ISA office in Ankeny on Monday. He reaffirmed his country’s friendship with Iowa farmers and reasons for China’s trade actions.
Former ISA President Rolland Schnell and several staff members attended in the meeting requested by Lei.
Schnell told China’s representatives that farmers and industry stakeholders are pro-trade and want to increase soybean exports to the country. The Newton farmer said he and other Iowa producers and political leaders have and will continue to push for a quick resolution to the trade conflict.
“Rest assured that U.S. farmers and ISA have heard what you said and we’ll share it,” Schnell said. “We’ve worked for decades to build relationships and the reputation as a reliable food producer and supplier. I don’t want to see us backtrack.”
Last week the U.S. proposed $50 billion worth of tariffs on 1,300 Chinese products to punish the country for disagreements over intellectual property rights. In response, China threatened to place 25 percent tariffs of similar value on more than a 100 U.S. exports such as soybeans, corn and beef. President Donald Trump shot back by asking U.S. trade officials if another $100 billion in tariffs against China is appropriate.
All this happened after Trump announced the U.S would increase tariffs on steel and aluminum in the interest of national security and to boost domestic production. That impacts $3 billion in Chinese imports so the country responded with $3 billion of duties on U.S goods, which included pork and ethanol.
Lei said China is “forced” to retaliate against unfair trade actions of the United States, which he said runs counter to World Trade Organization rules. Lei said improvement has been made in China to protect intellectual property rights, but admitted more is needed.
China doesn’t force U.S. companies to disclose intellectual property, the diplomat said. Americans can trust China, he added.
“We don’t want to fight but we must respond,” Lei said. “We believe it’s a critical moment for our bilateral approach to trade.
“We encourage ISA to play a critical role and talk to your federal government to avoid this imminent trade war to protect the interest of farmers and consumers,” he continued. “We don’t want to see unnecessary action on either side.”
ISA leaders agreed neither side wins in a trade war. They emphasized Iowa’s friendship with China and the importance of U.S. soybeans to the nation for the diplomats to share with their government.
The U.S. exported nearly 1.4 billion bushels of soybeans to China last year — about 40 percent of its needs — valued at $12.4 billion, according to U.S. Department of Agriculture (USDA) data.
“U.S. soybean farmers have had an office in China for 36 years,” said Grant Kimberley, ISA market development director. “We’ve helped modernize food production including intensive pond aquaculture. We have strong relationships in China.”
Mike Steenhoek, Soy Transportation Coalition executive director, reminded the Chinese officials transportation gives the U.S. a competitive advantage over Brazil. The county supplies about 50 percent of China’s soybean needs, which is likely to escalate if China enacts tariffs on U.S. beans.
In the fourth quarter of 2017, USDA data shows it cost $82.09 and $94.05 to ship a metric ton of soybeans from Davenport and Sioux Falls, respectively, to Shanghai. It cost $115.01 to transport a metric ton of soybeans to Shanghai from North Mato Grosso, Brazil.
“We have an advantage shipping soybeans in a cost-effective and reliable manner,” Steenhoek said.
Like the weather, ISA Policy Director Carol Balvanz said there are many things out of farmers’ control such as overall U.S. trade policy. But it’s often a topic of discussion with Iowa’s congressional delegation.
Balvanz said the Trump administration knows farmers don’t want the nation’s soybean market share in China to erode.
“We have a good connection with leaders,” she said. “But that doesn’t mean Iowa always gets our way.”
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