Threat to retain tariffs counterproductive to ending trade war with China04/03/2019 | Soybean Exports, Policy, Soybean News, Economics
By Aaron Putze, APR, ISA communications director
Threats by the Trump Administration to keep tariffs enforced on Chinese products even after an initial trade agreement is reached is counterproductive, says Iowa Soybean Association President Lindsay Greiner.
“The declaration, which has been made more than once, is extremely disconcerting and confounding,” wrote the Keota soybean, grain and pig farmer in a letter delivered Wednesday to Iowa’s congressional delegation.
“If reciprocal tariffs have generated current pressure to reach an agreement, we believe that removing the tariffs and relieving that pressure should be a necessary part of any agreement.”
Greiner’s comments come just days after participating in a week-long trade mission to China. It included conversations with Terry Branstad, U.S. Ambassador to China, at the U.S. Embassy in Beijing. Meetings were also held with soybean buyers and processors in Shanghai and Guangzhou representing more than 50 percent of the country’s soybean imports.
“They assured us that independent soybean buyers and livestock feeders want to buy U.S. soybeans, but will not and cannot make such purchases until U.S. tariffs are lifted,” Greiner says. “In the meantime, Iowa soybean farmers will continue to suffer from restricted access to China, by far our most important foreign customer.”
Record U.S. soybean supplies totaling nearly one million bushels are forecast to double before the 2019 soybean harvest begins this fall. Absent a trade agreement coupled with significant purchases by key trading partners, domestic soybean prices – already below the cost of production – will slide further.
“Farms will be lost if the situation is not quickly remedied,” Greiner says. “We need China reopened to U.S. soybean exports within weeks, not months or even longer.”
The soybean industry has always considered the lifting of Section 301 tariffs by the U.S. in exchange for China removing its retaliatory 25 percent tariff on U.S. soybean imports as essential to any agreement between the two countries.
Greiner said he understands concern regarding enforcement of other provisions of a deal, given China’s past record of walking back its commitments. And, why the Administration would want to include a “snap back” mechanism to re-impose tariffs in the event other parts of any agreement were not honored.
But the President’s recent statement that tariffs should remain in place to ensure China’s compliance deal’s terms, rather than being rescinded as a part of that agreement, is counterproductive to achieving a resolution to the ongoing trade war.
“It has not been enough for China to make one-off ‘good will’ purchases of U.S. soybeans over the last three months,” says Greiner. “Any longer-term plan to manage soybean trade under which China would guarantee to buy specified amounts of soybeans over an extended period of months or years—but leave its 25 percent tariff in place—is not an acceptable alternative to full market access.”
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