China’s Virus-Safety Demand Is Latest Hurdle to Trump Trade Deal
Isis Almeida, Michael Hirtzer, Tatiana Freitas and Mike Dorning, Bloomberg
via Yahoo Finance - June 23, 2020
(Bloomberg) -- The U.S.-China trade deal has just suffered a new setback.
China wants international shippers of meat and soybeans to sign a document attesting their cargoes meet safety standards to ensure they aren’t contaminated with the novel coronavirus. That’s a step many American exporters have so far been reluctant to take for fear of liability, with Tyson Foods Inc. being the first to confirm it’s signed the certificate.
The new demands from China could end up being an impediment to shipments, further delaying the $36.5 billion in farm purchases the Asian nation pledged under the phase one trade deal.
The move comes even as the world’s major public health authorities say the virus isn’t foodborne, raising questions over why China is taking the action. It could also act as a non-tariff trade barrier, a tactic the Asian country has applied in the past with everything from American corn cargoes to Canadian canola.
“I believe this is simply a buyer seeking leverage,” said Chris Robinson, managing director of agriculture and commodities at TJM Institutional Services in Chicago. “They were notorious in the past for canceling shipments for various ‘infractions,’” he said referring to China.
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On Sunday, China suspended poultry imports from a Tyson Foods plant where hundreds of employees tested positive for Covid-19, stoking concerns over the broader implications for U.S. and global meat exports. If shippers don’t sign the new affidavits, they could be subject to more bans.
This comes just after China signaled last week it was getting ready to accelerate purchases of American farm goods to comply with the trade deal following recent talks with U.S. officials in Hawaii. Donald Trump has touted the deal as being a big boost to farmers, a key part of his base as he seeks re-election in November.
China’s latest actions could just be the country “stirring the pot” ahead of the U.S. presidential elections in November, Robinson said.
Traders are already on edge after a Trump official on Monday raised questions about the deal before the president himself said the agreement was “fully intact.” Rhetoric between the two countries has intensified recently. Trump employed a racist slur in referring to the pandemic as the “Kung flu” at a rally over the weekend in Oklahoma and the administration has been criticizing Beijing for saying it would impose contentious new national security legislation on Hong Kong.
Chinese buyers are asking soybean and meat shippers to comply with safety regulations “to ensure that food imported into China is not contaminated with the Covid-19 virus,” according to the declaration seen by Bloomberg. The request was directed at “a wide variety of meats, seafood and other foodstuffs,” the U.S. Meat Export Federation said in a message to members.
For shippers, there are many unknowns, including whether and how cargoes will be subjected to Covid-19 testing and what sanctions could be imposed if China says the shipments carried the virus. So far, U.S. exporters seem to be taking a conservative approach, signaling concerns over signing the document.
Late Tuesday, Tyson confirmed it signed the statement declaring it is complying with Chinese laws and international food-safety standards.
“We are very confident in the safety of our products and have put measures in place that are in full compliance with all applicable requirements, and have signed the certification on that basis,” Tyson said.
Meanwhile, some competitors in rival Brazil including meat giants JBS SA and Marfrig Global Foods have agreed to sign.
China, which so far has only purchased a fraction of the farm goods it promised to buy under the trade deal, has a history of using non-tariff barriers to stifle shipments.
That was the case with its tariff-rate quotas for crops including...
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