It looks like US agriculture was the main beneficiary of the “Phase 1” agreement with China that was signed Wednesday.
With the signing, the US Trade Representative’s office published a fact sheet about what was in the trade agreement. The pact requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services and currency and foreign exchange.
The US agreed to modify its Section 301 tariff actions in a significant way.
The agreement also includes a commitment by China that it will make substantial additional purchases of US goods and services in coming years. Most importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.
INTELLECTUAL PROPERTY
The Intellectual Property chapter addresses numerous longstanding concerns in the areas of trade secrets, pharmaceutical-related intellectual property, geographical indications, trademarks and enforcement against pirated and counterfeit goods.
FINANCIAL SERVICES
The Financial Services chapter addresses several longstanding trade and investment barriers to US providers of a wide range of financial services, including banking, insurance, securities and credit rating services, among others.
These barriers include foreign equity limitations and discriminatory regulatory requirements. Removal of these barriers was expected to allow US financial service providers to compete on a more level playing field and expand their services export offerings in the Chinese market.
CURRENCY
The chapter on Macroeconomic Policies and Exchange Rate Matters includes policy and transparency commitments related to currency issues.
The chapter addresses unfair currency practices by requiring high-standard commitments to refrain from competitive devaluations and targeting of exchange rates, while promoting transparency and providing mechanisms for accountability and enforcement. This approach will help reinforce macroeconomic and exchange rate stability and help ensure that China cannot use currency practices to compete unfairly against US exporters.
EXPANDING TRADE
The Expanding Trade chapter includes commitments from China to import various US goods and services over the next two years in an amount that exceeds China’s annual level of imports for those goods and services in 2017 by no less than $200 billion.
China’s commitments cover a variety of US manufactured goods, food, agricultural and seafood products, energy products, and services.
China’s increased imports of US goods and services were expected to continue on this same trajectory for several years after 2021 and could contribute significantly to the rebalancing of the US-China trade relationship.
DISPUTE RESOLUTION
The Dispute Resolution chapter sets forth an arrangement to ensure the effective implementation of the agreement and to allow the parties to resolve disputes in a fair and expeditious manner. This arrangement creates regular bilateral consultations at the principal level and the working level.
It also establishes strong procedures for addressing disputes related to the agreement and allows each party to take proportionate responsive actions that it deems appropriate. The US will monitor China’s progress vigilantly in eliminating its unfair trade practices and implementing these obligations.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at mostly $124 to $126 per cwt, steady to $1 higher than the previous week, although mostly at the lower end of the range. Dressed-basis trading was done at mostly $200 per cwt, steady to up $2.
The USDA choice cutout Wednesday was down $0.23 per cwt at $212.53, while select was down $0.63 at $209.67. The choice/select spread widened to $2.86 from $2.46 with 128 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $146.57 per cwt, up $0.06. This compares with Wednesday’s Jan contract settlement of $145.42, down $0.47.