China's Plan for $30Bln US Agriculture Imports 'Camouflages Real Issue' - Broker

© AP Photo / Pablo Martinez MonsivaisU.S. President Donald Trump, second right, and China's President Xi Jinping, second left, attend their bilateral meeting at the G20 Summit in Buenos Aires, Argentina.
U.S. President Donald Trump, second right, and China's President Xi Jinping, second left, attend their bilateral meeting at the G20 Summit in Buenos Aires, Argentina. - Sputnik International
President Donald Trump has delayed US tariffs on China that were set to increase on March 1st. Trump made the announcement on his Twitter page on Sunday. This comes amid reports that Beijing is offering an additional $30 billion a year for the purchase of US agricultural products including soybeans.

Sputnik has discussed US-China trade talks with Don Roose, president of an Iowa-based broker US Commodities.

Sputnik: Why is China considering importing $30 billion of US agricultural goods, what's your opinion about this?

Don Roose: I think it's a moving target. It's a big number. The balance of trade is a negative for the US and our whole push has been to get the balance of trade back to some kind of a more of a balance over the next five years. And probably a bigger issue is the IT and IP protection, but also within that negotiation we're talking about a big number. $30 billion is a huge number.

They've targeted 10 items and agricultural is in there as far as purchases, but to put it into perspective, last year we were more like $19.7 billion of trade with China that they bought. So you're talking about jumping from basically $20 billion to $50 billion. So that's a large number and I think that's still very much a work in progress.

Sputnik: Apart from the United States, China also buys agricultural goods from various markets, like Brazil, Russia and other big agricultural nations. So what consequences can this move have on Brazil and other agricultural markets?

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Don Roose: I think when you look at it in the broad scope of things there's no doubt that China has the big belt way traded they talk about going around the big area through Africa, through Australia and New Zealand. I travelled in all those areas just in the last six months, so I'm very much aware of the Chinese influence in all those countries are great and they're trying to work out trading partners around the world and not just rely on one. But our best export time on soybeans, and that seems to be the focus for the US, is right before South America harvests their crop.

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Well what we did we lost market share this last 6 to 8 months to Brazil and Argentina and I think the real question mark is, is the market share lost permanently to a certain degree, is it shuffled around where they changed some of their imports with other commodities, where in other words they use less soybeans more of something else, you know that's a possibility. So I think we just have to wait and see did this whole tariff programme disrupt market share for an extended future, we don't know; we're going to find that out.

Sputnik: Some experts, some analysts have called this proposal like the deal to end the trade war. Do you think these $30 billion have the real potential to break this deadlock in US-China relations?

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Don Roose: I think the number out there is one that is being pushed, maybe it's camouflaging, that's a big number, a very big number, and maybe it camouflages the real issue which is the IP and IT protection. I think that's a huge item because what we are really talking about is that China advancing unfairly at the expense of our companies in the US and it is just an unfair trade practice that allows them to advance.

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So I think it's a large number, I think that China is a very savvy negotiator and thinker and I think it's going to be interesting how this goes forward, but our best guess is they will probably push the negotiations past the March 2 deadline where our tariffs are supposed to go from 10% to 25% on China.

Sputnik: You've mentioned that Chinese are savvy negotiators, so my question is, is this proposal the result of Trump's trade tactics or is it basically the Chinese being quite generous to the United States agricultural market in order to finally find a solution?

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Don Roose: They always say in good negotiations that neither side feels like they really had a huge victory, that everybody gives a little bit and I suspect that's what it's going to be, is that the US gets some of what they want, not everything, China gets some of what they want, not everything, and I think the other thing is the pushback might come from you can have a deal but then on the verification, years down the road, you know, and ones down the road.

Sputnik: Terry Branstad is the US Ambassador to China and at the same time he used to be the governor of your state of Iowa, do you think it was his idea to maybe encourage Chinese investors to look at the agricultural sector of soybeans and other agricultural goods in order to find some solution?

Don Roose: Well, I do know Terry Branstad, he's a good guy. He was the governor for a number of years and I was over and visited with him in May actually, sat down with him.

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He is very savvy, very political, coming from an agricultural state I'm sure that he had a positive influence on that because he comes from a farm background himself and he's had a long relationship with Xi. So I think that all of those things, he helped probably agriculture, he helped grease the wheels for talks that are positive and I think he was a big influence in my mind. 

The views expressed in this article are solely those of Don Roose and do not necessarily reflect the official position of Sputnik.

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