February 19, 2020
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Trade deal includes Chinese commitment to buy more US goods, including lobster

Robert F. Bukaty | AP
Robert F. Bukaty | AP
In this Aug. 24, 2019, file photo, a dealer at Cape Porpoise holds a 3 1/2 pound lobster in Kennebunkport, Maine. Members of the US lobster industry are hopeful a thaw in trade relations with China in 2020 could reopen one of the biggest markets in the world.

WASHINGTON — President Donald Trump signed a trade agreement Wednesday with China that is expected to boost exports from U.S. farmers and manufacturers and is aimed at lowering tensions in a long-running dispute between the economic powers.

The agreement is being described as “phase one” of a larger negotiation focusing on tensions in the U.S.-China trade relationship. Chinese leader Xi Jinping said in a letter to Trump that the first phase is “good for China, the U.S. and for the whole world.” The letter was read by Beijing’s chief negotiator, Vice Premier Liu He.

But this agreement would do little to force China to make the major economic changes such as reducing unfair subsidies for its own companies that the Trump administration sought when it started the trade war by imposing tariffs on Chinese imports in July 2018.

The agreement is intended to ease some U.S. economic sanctions on China while Beijing would step up purchases of American farm products and other goods. Trump cited beef, pork, poultry, seafood, rice and dairy products as examples.

Lobsters are also included among a category of seafood products that China would commit to purchasing. Retaliatory Chinese tariffs on lobster from the U.S. have caused a steep drop in Maine lobster exports to the nation of almost 1.4 billion people after years of growth.

Those tariffs are still in place and are not explicitly affected by the agreement, but U.S. Sen. Susan Collins, a Republican who lobbied the Trump administration on the change along with the rest of Maine’s congressional delegation and the lobster industry, called it “a significant victory.”

It’s unclear how much more lobster will be purchased by China as a result, but Annie Tselikis, the executive director of the Maine Lobster Dealers’ Association, said it was likely that the industry would gain back at least some of the market share it has lost amid tariffs.

“Is this the silver bullet to open up trade with China again? No,” Tselikis said. “It’s definitely a step in the right direction. This is a sign of de-escalation.”

The deal would lower tensions in a trade dispute that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy. Trump said easing trade tensions was critical.

“Keeping these two giant and powerful nations together in harmony is so important for the world,” Trump said. “The world is watching today.”

While the deal stops short of many changes the president has sought from China, it leaves in place tariffs on about $360 billion in Chinese imports, leverage the administration hopes will generate future concessions. U.S. Trade Representative Robert Lighthizer said work on follow-up negotiations will hinge on how China fulfills commitments it made in the initial phase.

His Chinese counterpart said “the world is now at a critical historical crossroads” facing choices of how to promote country-to-country cooperation.

“Cooperation is the only right choice,” Liu said.

Most analysts say any meaningful resolution of the main U.S. allegation — that Beijing uses predatory tactics in its drive to supplant America’s technological supremacy — could require years of contentious talks. Skeptics say a satisfactory resolution may be next to impossible given China’s ambitions to become the global leader in such advanced technologies as driverless cars and artificial intelligence.

The thornier issues are expected to be taken up in future rounds of negotiations. But few observers expect much progress before the U.S. presidential election in November.

The U.S. has dropped plans to impose tariffs on an additional $160 billion in Chinese imports, and it cut in half, to 7.5 percent, existing tariffs on $110 billion of goods from China.

Beijing agreed to significantly increase its purchases of U.S. products. According to the Trump administration, China is to buy $40 billion a year in U.S. farm products — an ambitious goal for a country that has never imported more than $26 billion a year in U.S. agricultural products.

So far this year, the U.S. deficit with China in the trade of goods has declined by 16 percent, or $62 billion, to $321 billion compared with a year earlier. The deficit will narrow further if Beijing lives up to its pledges to buy dramatically more American imports.

Trump’s tariff increases have proved to be a headwind for China’s economy, which was already slowing, though the damage has been less than some expected. Chinese global exports eked out a 0.5 percent increase in 2019 despite a plunge in sales to the United States, according to Chinese customs data.

BDN writer Michael Shepherd and Joe McDonald and Darlene Superville of the Associated Press contributed to this report.

 


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