China should be buying wheat, corn and rice from the U.S. as a result of the "phase one" trade deal and tariffs will not hamper those sales, Gregg Doud, chief agricultural negotiator with the office of the U.S. Trade Representative said Friday.
“It’s (China’s) responsibility to deal with that,” Doud told Agri-Pulse when asked about the tariffs. “That’s the answer.”
Doud’s comments are timely as sources tell Agri-Pulse Friday that China is already putting together allocations to fulfill the tariff rate quota it agreed to for corn.
China did not agree to scrap its retaliatory tariffs on U.S. ag commodities as part of the deal signed on Wednesday at the White House, but it did commit to increasing imports from the U.S. and also promised to honor past pledges on tariff rate quotas for the grains. That promise followed a recent decision by the World Trade Organization that China was breaking international commitments by not filling the yearly quotas.
When China joined the WTO it agreed to a 9.64-million-metric-ton quota for wheat, a 7.2-million-metric-ton quota for corn, a 2.66-million-metric-ton quota for long grain rice and a 2.66-million-metric-ton quota for short and medium grain rice.
Since then, the country has only imported a small fraction of that. Usually what would happen, Doud explained, is China would allocate all of the quotas to state trading enterprises and they would lock it up after only using a small percentage.
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But now, China has agreed to allocate the quotas to state and private companies and then reallocate the quotas if any companies are not filling them, Doud told a gathering of the U.S. Wheat Associates.
“We made it clear that our expectation is as follows,” Doud said of China. “You’re going to use that TRQ and somebody’s going to sell you wheat. It may not be the U.S. and that’s fine, but doggone it, you’re going to use it and follow the rules.”
Doud predicted that U.S. soft white wheat and spring wheat will be the most popular with Chinese importers.
Vince Peterson, president of the U.S. Wheat Associates, said in an interview that the details are still unclear, but he expects China to begin to periodically exempt importers from tariffs in order for them to import from the U.S. It’s model of operation already being used by China to buy U.S. soybeans, he said.
“In this early stage, our customers — millers in China — are going to have to go to their government and ask for those exemptions from the tariffs to buy wheat under the TRQ, which is going to have to be allocated to them,” Peterson said.
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