Although the phase one trade deal with China doesn’t address tariffs on U.S. beef, significant ground was gained on non-tariff barriers to Chinese markets.
The National Cattlemen’s Beef Association is going over the details of the agreement signed on Wednesday, but the provisions it has seen are “very positive” and address a lot of the things NCBA asked for, Kent Bacus, NCBA senior director of international trade and market access, said.
“This is a truly momentous day for the U.S. beef industry and National Cattlemen’s Beef Association,” he said in a telephone conference with the media.
U.S. beef had been locked out of China since 2003, following the detection of bovine spongiform encephalopathy in a Washington state dairy cow, until the industry gained hard-fought but limited access in 2017.
That access was a result of President Donald Trump making it a top agenda item at the Mar-a-Lago Summit, but China kept many other restrictions on U.S. beef. Those included bans on production technology, such as hormones and beta agonists, the BSE-related 30-month age limit on cattle slaughtered for beef and bookend traceability, he said.
“We still face really significant nonscience- based, non-tariff trade barriers,” Jennifer Houston, NCBA president, said.
But the phase one agreement will get rid of a lot of those restrictions and allow the U.S. to sell high-quality beef in China, she said.
When Chinese consumers get a taste of U.S. beef, “this market is absolutely going to explode and be such a positive event for all of America’s beef producers,” she said.
U.S. beef exports to China have been limited, totaling $30 million in 2017, $60 million in 2018 and $70 million from January through November in 2019, Bacus said.
That’s compared to last year’s exports of $1.8 billion to Japan and $1.7 billion to South Korea — both much smaller countries than China, he said.
“So we had a lot of unmet potential due to a lot of these non-tariff trade barriers,” he said.
Phase one of the trade agreement lifts the BSE-related age restriction and recognizes the U.S. traceability system. In addition, China will establish maximum residue levels for three hormones commonly used in the U.S. for decades consistent with Codex standards.
China also will use maximum residue levels established by other countries for substances where Codex standards do not exist and will conduct a risk assessment for ractopamine, a beta agonist used in cattle and swine in the U.S., consistent with international guidelines. While NCBA will continue to work on the beta agonist issue, the provisions on hormones, traceability and age limits are huge wins, Houston said.
“We see a lot of progress on these nontariff trade barriers, and we see this as a great opportunity for the U.S. beef industry to tap into a Chinese market that wants our product,” Bacus said.
The U.S. Trade Representative’s office estimates U.S. exports of beef and beef products to China could reach $1 billion annually.
The industry has higher expectations, however. U.S. Meat Export Federation has estimated beef exports to China could reach $4 billion in five years if all restrictions were lifted.
NCBA thinks even that estimate is conservative, given the massive hog losses in China due to African swine fever, Bacus said.