China Far Behind on Phase One Trade Agreement Commitments

Written by: Gina Tumbarello   |   February 10, 2022

Trade, China

Feb. 14 marks the two-year anniversary of the U.S.-China phase one trade agreement. One of the provisions from the agreement committed China to purchasing more U.S. products by the end of 2021. Specifically, China was to increase its imports of U.S. products by at least $200 billion from 2017 numbers between Jan. 1, 2020, and Dec. 31, 2021. This week, the U.S. Department of Commerce released new data that shows China is $17.8 billion below its commitment, $14.4 billion of which is on agricultural products.

Without specifying any details, Deputy U.S. Trade Representative Sarah Bianchi said at an event hosted by the Washington International Trade Association this week:

“You know, it is really clear that the Chinese haven’t met their commitment in phase one. That’s something we’re trying to address…It’s not our goal to escalate here. But certainly we’re looking at all the tools we have in our toolbox to make sure they’re held accountable.”

While China may not have met its purchasing commitments for agriculture, overall, U.S. animal food exports to the country saw a 61% increase in 2021 compared to 2017 (see chart below). The products the American Feed Industry Association has been tracking closely are “other feed products,” which are mainly feed additives and compound feeds and pet food.

The drastic increase in pet food exports is misleading as these are primarily reflective of exports that previously went to Hong Kong, which are now being diverted to China because of the U.S. industry’s ability to successfully register manufacturing facilities with China under the phase one agreement. The “other feed products” exports saw a 9% increase, demonstrating some promise.

Once U.S. feed additive, premix and compound feed manufacturers are fully able to register their manufacturing facilities, the AFIA expects this number to grow even further. Another influencer inhibiting growth is the number of additional tariffs China has put on feed and pet food imports from the United States.

We hope to see the administration make China accountable and honor its commitments in the new year.