US agriculture secretary warns on China’s approach to trade deal

US agriculture secretary warns on China’s approach to trade deal

Sonny Perdue says Beijing’s ‘attitudes’ are hardening in talks to resolve spat

Donald Trump’s top agricultural official has said that Chinese “attitudes” towards striking a trade deal with the US have hardened, in the latest sign that negotiations to resolve the conflict hanging over the global economy have hit a rough patch.

Sonny Perdue, the US agriculture secretary, said he hoped Beijing would agree to “significant increases” in purchases of American farm products in a deal, but suggested that China’s willingness to make the final concessions on a number of issues was unclear.

The two sides have been wrangling over the substance of the agreement, including the scope of Chinese concessions on issues such as industrial subsidies, treatment of intellectual property and foreign investors. They have also been trying to ensure that Beijing will live up to its commitments.

“It’s mostly attitudes. There doesn’t seem to be as much aggressive passion for curing some of these things as we would like to see,” Mr Perdue said in an interview with the Financial Times.

“It’s not moving as quickly as we believe it should. I almost think it’s a trade negotiation strategy: they get you hopeful and optimistic and then it’s definitely two steps forward, one step backward; [and] one step forward, two steps backward.”

Mr Trump has dispatched Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, to China next week for a new round of talks, setting the stage for a possible “signing” summit between Mr Trump and Chinese president Xi Jinping at the end of April.

Mr Perdue, 72, spoke shortly before Mr Trump said he was prepared to leave tariffs on Chinese imports in place for a “substantial period of time” even after a deal is struck, in a bid to keep pressure on Beijing to live up to its commitments. But Mr Xi is unlikely to endorse an agreement that does not lift at least a large chunk of US levies. 

With farmers bearing the brunt of retaliatory tariffs imposed by Beijing on US exports, Mr Perdue has been trying to fend off a political backlash from a key component of Mr Trump’s political base.

“The stakes are high, very high. Farmers have been loyal in supporting the long-term game that President Trump has outlined regarding re-establishing a more favourable long-term trading relationship with China but certainly the longer it goes on the more anxious they become,” he said.

To help farmers cope with the impact of China’s tariffs, the Trump administration approved an aid package of up to $12bn to compensate producers for lost revenue. But Mr Perdue said farmers should not anticipate a new fund this year, even if no deal is agreed with Beijing.

“Farmers have to act on what they see today. The markets are the markets and none of us can predict what the markets will do: I would say it’s either going to be very, very good, or not so good,” he added.

If trade talks are successful, China is expected to ramp up its purchases of US agricultural products, including soyabeans and corn, but also poultry, beef, pork and grains. Mr Perdue would not put a precise figure on the scale of the purchases, but said officials had discussed moves by China to “double or treble” its imports of US farm products compared with the past.

In 2017, US agricultural exports to China, including ethanol, biodiesel, distilled spirits, forestry and fish products, amounted to $24bn, but they declined to $13.2bn last year amid the trade war.

“We have those products available. China uses them, they need them, and that would be a really good faith signal that they are interested in really trying to resolve the severe trade deficit,” Mr Perdue said.

Some US farmers are under financial strain — partly as a result of the trade war — and Mr Perdue said he was concerned that “working capital” had declined among producers. But he added that land values had held up and noted the resilience of the sector. “Very few industries in the US could withstand that kind of revenue loss and remain viable,” he said.

Mr Perdue added that one lesson farmers had drawn from the trade war was the need to diversify away from China. “I don’t think we want to become dependent on China as a customer in the long term,” he said.

“While we would welcome increased purchases in the near term we should use that as a time to develop a broader customer base worldwide.”

The highest priority for US farmers on trade after a resolution of the conflict with China is a possible deal with Japan, given that producers from other Pacific nations and Europe are gaining a competitive edge in the country after the US withdrew from the Trans-Pacific Partnership. “We are very hopeful that we will see a bilateral with Japan,” Mr Perdue said.

He added, however, that he was “frustrated” with the “stalemate” in trade discussions with the EU. “They say no deal with agriculture — we say no deal without agriculture.”

For the moment, however, the focus is China, with Mr Perdue saying the odds of a deal are uncertain. “It ebbs and flows, I think is what we would say right now,” he said. “It’s never over ’til it’s over, and then it’s never really over in trade negotiations with China.”