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China trade update

In late March, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived in Beijing for two days of trade talks with Chinese officials. This was followed by another round of talks in Washington, D.C., in early April. They indicated that progress was being made.

The U.S. Administration officials say they have seen progress in all areas from a month ago. Talks have shifted from a focus on Chinese purchases of U.S. goods to more structural issues with the trade agreement, giving hope that resolutions will come sooner rather than later. China indicated it wants the U.S. to lift tariffs as a part of the deal, but the U.S. is pushing back as a way of maintaining leverage to ensure Beijing follows through on any commitments it makes. Discussions on this area of the agreement could potentially push a resolution from April into May or June, according to Lighthizer.

In addition, a World Trade Organization (WTO) dispute settlement panel found that China has provided trade distorting domestic support to its grain producers well in excess of its commitments under WTO rules. China’s market price support policy artificially raises Chinese prices for grains above market levels, creating incentives for increased Chinese production of agricultural products and reduced imports.

This panel report is a significant victory for U.S. agriculture that will help American farmers compete on a more level playing field. This dispute is the first to challenge China’s agricultural policies that disregard WTO rules.

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