U.S. and China may not release full details of trade deal that they’ll sign this week

As China and the United States prepare to sign a phase one trade deal on Wednesday, doubts remain about whether all the details of the agreement will be released publicly and whether Beijing can meet the lofty purchasing demands.

High-ranking Trump administration officials have insisted that details of the agreement will be made available.

However, there are signs that the full text and numbers won’t be released. U.S. Trade Representative Robert Lighthizer has previously said that some aspects of the deal won’t be made public, including specific targets for Chinese commodity purchases, in order to prevent market manipulation.

“You will get the top line categorical numbers, but not the individual product lines,” said Clete Willems, who was deputy director of the National Economic Council and a member of the U.S. negotiating team with China.

The administration isn’t legally obligated to publish the full text of the deal because it was an executive agreement that didn’t require congressional approval, said Derek Scissors, a resident scholar at the American Enterprise Institute.

“Just because the U.S. is happy with the translation doesn’t mean we get to see everything,” he said.

For example, Scissors, who has previously advised the administration on China issues, said he is “90 percent certain” that there is an unwritten commitment by the U.S. to further cut tariffs if the Chinese are on track to make the roughly $200 billion in additional purchases over the next two years as promised.

China will also be reluctant to sign off on text that acknowledges wrongdoing.

“The Chinese are never going to admit in their version that they engage in coercive technology transfer,” Scissors said. “Is the Chinese version of things going to be very different from the U.S. version?”

A post on the semi-official Chinese social media account pointed readers to a statement made by the Ministry of Commerce in December, which said: "After the agreement is officially signed, the contents of the agreement will be announced to the public.”

But it is not unusual for trade agreements not to be published in their entirety, and the Chinese government will be reluctant to publicize anything which may vex its other trading partners. Other suppliers to China could lose out should Beijing meet the U.S. demands to drastically increase some of its purchases.

Adding it up

Since the Office of the U.S. Trade Representative published its phase one fact sheet in December, economists have debated whether China could meet U.S. purchasing demands. These would effectively double China’s imports of U.S. goods, which were around $188 billion in 2017.

If Beijing reverted to 2017’s levels and added $200 billion, it would buy $576 billion of U.S. goods and services over two years. The staggering jump is theoretically achievable, given that the total value of China’s imports in 2017 alone were worth $1.84 trillion.

Rosa Wang, a Shanghai-based analyst at agricultural research firm JCI China, said she is “quite confident” that China could meet Trump’s demand to buy at least $80 billion of farm goods over two years, but the government would need to reduce tariffs or issues waivers to make sure private buyers join state buyers in importing American farm products.

Agricultural imports are also complicated by an outbreak of African swine fever in China, which has led to the loss of up to one-quarter of the world’s pigs to disease or cull.

The situation means that China needs more protein for human consumption. In November, China’s imports of beef and pork hit record levels, as it stocked up on meat ahead of the Lunar New Year festival later this month.

Other factors elsewhere in the world may open the door to U.S. meat sales, such as the devastating wildfires, which will hit Australia’s beef exports, said Chenjun Pan, an analyst at Rabobank.

“Beef supply from Australia will be impacted by the fires,” Pan said. “The trend was already for lower supply from Australia, since the drought has been quite severe.”

But most of China’s soybeans and corn go into animal feed, meaning that demand for these crops is dependent on China being able to increase its pig herds. The disease is preserved by cold weather and spread by farm vehicles which are harder to clean in icy conditions. With northern China in the grips of bitter winter, the crisis is far from over.

“70 percent of the feed is for growing and finishing pigs. Even if the sow herd was up to numbers right now, we would still be six months away from having full numbers in growing and finishing pigs,” said E. Wayne Johnson, a pig farming specialist based in northern Beijing.

Farmers wait for evidence of purchases

American wheat and corn farmers have long craved unfettered access to the Chinese market, but this was ruled out last week by Han Jun, vice minister of agriculture and a key part of China’s negotiating team. Han said that China would not raise import quotas on corn, rice or wheat, so anything imported above the 2020 quota level will remain subject to a 65 percent tariff.

In 2017, China imported $900 million worth of corn, just $200 million of which came from the U.S. In the same year, it imported $1.3 billion in wheat, with $500 million from the U.S., as well as $1.8 billion in rice, with none of that being American grown.

The U.S. wants “to push grain down China’s throat, but China's doesn’t want it,” Johnson said. In addition, he noted that the country is going to have a glut of domestically produced grain.

Last year, only 56 percent of China’s corn import quota was met, 28 percent of wheat and 40 percent of rice. While this may suggest capacity to import American grain, it is unclear whether it is needed. Beijing has prioritized self-sufficiency in these three “strategic” grains and has large stockpiles of reserves.

Still, American farmers are hopeful that they will see a boost in exports.

“The trade war caused our market share to plummet to zero for all of 2018. We recovered 1 percent of the market share in 2019,” Michelle Erickson-Jones, a director at Farmers for Free Trade, wrote in a blog post. “We are hopeful, however, that we will recover a substantial amount of this market share through the phase one agreement.”

Energy sales are also a priority for the U.S., and on the face of it, the sector has room to grow. U.S. exports of crude oil and related petroleum products in the July to Oct. 2019 period were roughly half what they were in the same time frame in 2017.

“Trump and American energy firms are definitely keen to revive oil and liquefied natural gas exports to China as suppliers from other countries like Australian LNG or Russian oil, have capitalized on the trade spat,” said Henning Gloystein, global energy director at the Eurasia Group.

But while China is eager to diversify its energy supply from the volatile Middle East, it would be reluctant to “engage in a long-term relationship as a buyer of strategically key products like oil and gas with a geopolitical competitor who is perceived to want to contain China’s rise,” Gloystein added.

“This will be especially the case should Trump win this year’s election. Beijing is concerned that a bolstered-up Trump could come back and use energy supply — which China sees as a strategic priority — for political leverage,” he said.