SINGAPORE/BEIJING (Reuters) – Beijing could remove extra tariffs imposed since last year on U.S. farm products to ease the way for importers to buy up to $50 billion worth, rather than direct them to buy specific amounts, the head of a government-backed trade association said.
FILE PHOTO: U.S. President Donald Trump and China’s President Xi Jinping shake hands before their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque
U.S. President Donald Trump said earlier this month that China had pledged to spend between $40 billion and $50 billion on U.S. agricultural products annually as part of a deal to end a trade war that broke out last year.
But the demand has become a major sticking point in the bilateral trade talks, as Beijing wants to buy based on market conditions instead of committing to a large figure and a specific time frame.
“What the government can do is to remove the extra tariffs, both sides need to do this. Then let the companies make the purchases based on their own will, and based on market rules,” Cao Derong, President of the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA) told Reuters in an interview late on Wednesday.
Beijing slapped additional 25% tariffs on a list of U.S. products including soybeans and other grains in July last year in response to tariffs Washington imposed on Chinese goods worth a similar value. China hiked some tariffs again in September this year.
CFNA, under the supervision of China’s Ministry of Commerce, is an influential trade association with members including top crusher Yihai Kerry, state-owned Sinograin, and branches in China of leading international trading houses like Cargill and Louis Dreyfus.
Cao added that this would create conditions for a “convenient” and “good” trade environment, rather than obliging firms to buy a certain amount of product during a certain period of time.
“After the tariffs are removed, the trade goes back to normal. Then how much the firms would buy depends on the market,” Cao said on the sideline of a Singapore forum led by China Center For International Economic Exchange.
While China can step up purchases based on market conditions, the $40-$50 billion target is “very high”, he added, and can’t be guaranteed.
The target sought by Trump is up to double the $24 billion China spent on American farm goods in 2017.
Analysts have also said Beijing would not be able to reach the target without removing substantial technical barriers.
Beijing has already stepped up buying of American soybeans and offered waivers to more importers to buy U.S. oilseed exempt of the extra tariffs, Cao added.
“We are stepping up imports and increasing purchases to release some goodwill gesture and create a better atmosphere and conditions for the negotiations between the two sides,” Cao said.
Beijing offered major crushers waivers for up to 10 million tonnes of soybean imports from the United States earlier this month, Reuters previously reported.
Cao did not confirm the volume of waivers granted. He said offers to waive tariffs on other products including pork have also been granted.
Trump and China’s President Xi Jinping had been expected to meet and sign an interim deal at an APEC summit next month. But Chile on Wednesday abruptly canceled the summit cue to civil unrest in its capital.
Reporting by Keith Zhai and Hallie Gu; Editing by Simon Cameron-Moore