The U.S. and China represent the world’s two largest economies, and together the two superpowers contribute a great deal to the prosperity and stability of the global economy, accounting for nearly one-third of the world’s GDP, one-third of its outward foreign direct investment, and one-sixth of world exports of agricultural products.
The U.S. Chamber of Commerce recently released an eye-opening report—“Cultivating Opportunity: The Benefits of Increased U.S.-China Agricultural Trade”—that showed that by reducing or eliminating relevant tariffs and other behind-the-border barriers between the two countries, it could result in $28.1 billion in additional cumulative gains in two-way agricultural sector trade over the 10-year period between 2016-2025.
“A variety of tariff and behind-the-border barriers persist in both the U.S. and China, leaving significant agricultural export opportunities unrealized,” Ruben Duran, senior manager for China at the U.S. Chamber of Commerce, says. “The U.S. Chamber of Commerce commissioned this report to better understand the unrealized two-way agricultural trade between the two countries due to these barriers to trade.”
Two-way agricultural trade has grown consistently over the last 10 years, increasing to $35.6 billion in 2015, and is expected to continue to grow, with cumulative gains over 2016-2025 forecast at $71.2 billion. If changes were made, U.S. agricultural exporters in the agricultural products, seafood, wood, and machinery sectors combined would realize gains of $17.6 billion above baseline projections.
“As projections in the report demonstrate, baseline agricultural trade with China is likely to rise due to several factors, including rising incomes and subsequent demand for meat protein, higher-quality food products, and better land management and production processes via high-tech equipment,” Duran says. “As the report states, resolving barriers to agricultural trade could increase these volumes by 40 percent for both economies.”
For China, the report recommends several policy reforms to help meet increased food demand overall and provide the opportunity for increased U.S. exports, including an adherence to timely, predictable, and science-based approaches for approvals of agricultural biotechnology, and equitable treatment for foreign animal vaccine products and imports.
“The implementation of improved animal health management with veterinary pharmaceuticals and vaccines can prevent and control animal diseases and increase access to quality meat products,” Duran says. Other recommendations include an increased transparency for existing TRQ allocations for commodities, and ensuring that they are large enough to be commercially viable, and elimination of subsidies for domestic farm machinery and encouraging the use of the latest equipment and increasing food production through advanced farm mechanization.
The report also highlights that, while the U.S. has a relatively open market to Chinese agricultural products, imports from China also have significant opportunity for growth. In order to achieve this growth, the report recommends that the U.S. maintain its openness, and refrain from implementing unnecessary regulatory burdens, while maintaining product safety.
“The opportunity for the U.S. and China to resolve barriers to increased agricultural trade is significant,” Duran says. “The two countries should continue to work together via bilateral and multilateral exchanges to resolve these barriers, so the two economies can realize the benefits of this increased trade, via increased exports and greater access to quality agricultural sector products.”