Donald Trump didn’t say anything during Tuesday’s State of the Union address to make Chad Hart think any major changes would be coming to the current trajectory of trade negotiations.
Hart is an associate professor of economics/crop markets specialist at Iowa State University.
He said he would have been surprised if anything new had been announced during the State of the Union, given how the recent discussions with China have been going.
“It sounds like some progress is being made behind closed doors, but not enough to really say where we are going to end up, yet,” he said.
Purchases of soybeans by China from the United States in the last few weeks may have been due to progress in trade talks between the two countries, he said.
“It looks like both sides are trying to do something to show the other that they are willing to negotiate,” he said.
Following the end of the partial government shutdown on January 25, government-supplied data has started to become available again, but several more weeks will pass before everything is caught up.
“It’s going to take some time to get back up to speed,” Hart said.
“At this point they (USDA) are releasing historical data. We are seeing the data from late December right now.”
Rumors of soybean sales to China in December couldn’t be checked because of the loss of data during the government shutdown.
“We’re confirming that there were some small sales made during December and we’re also getting new updates on bigger sales,” Hart said. “The latest ones that have been confirmed have been fairly sizeable, but it’s still well below China’s usual purchases.”
One potential positive of the trade disputes Hart sees is that the United States has developed other markets for soybeans.
“With China being out of the market for us for a while, we did look to find different and new markets for soybeans and we have found some,” he said. “I’m going to watch to see if we can continue to build in those markets, even as we try to bring China back in.
“We may be trying to normalize our relations with China but continue to build on some new markets that we have developed.”
Hart said he will be watching reports to see how much movement China makes in the soybean market - and possibly in the pork market.
The United States and China are working to find areas of agreement so work can move forward on a long-term trade agreement, he said.
Negotiations to solidify agreements with other trade partners will be important, as well.
“We have been in some discussions with the EU (European Union) and with Japan talking about longer term deals,” he said. “That’s one of the things I’ll be looking for as we go through the next few months.”
Hart hopes better access for ag products will be the result of the trade conflicts.
“Hopefully we will see some things improve,” he said. “In this case, when you get in a dispute like this, you don’t just want to get back to where you were. I think you always try to go to something that is at least a little more open in terms of trade when you are looking at a new trade agreement.”
China’s treatment of intellectual property rights is an area that needs to change, Hart said.
In return, China wants more access to United States markets they have been shut out of in the past.
“Both sides have to feel that they have gained something,” he said.
All three players in the negotiation of the United States Mexico Canada Agreement (USMCA) made concessions and received gains, he said.
The United States made gains in the dairy area and with automobile parts moving across the borders. In exchange, Canada and Mexico were given more power in the dispute-settlement process.
“Both sides had to give some concessions to move forward but I believe they both felt that the bill makes for a better trade package than we had before,” Hart said.
Hart noted that the USMCA and NAFTA are not radically different.
“I would say NAFTA was a really good agreement and USMCA did make improvements in small areas,” he said. “For the most part, they are basically the same agreement.”
USDA will continue to work to get caught up on scheduled reports and programming, Hart said.
The shutdown also disrupted other areas related to the farm economy.
“One of the biggest things we’ll be watching for is any sort of training for the Farm Bill because those programs did change with the passage of the bill in 2018,” Hart said. “The farm bill got signed on the (December) 20th and the shutdown started on the 21st. It didn’t give USDA any opportunity to get moving on those programs and now they are trying to catch up for lost time.”
Trump is threatening another shutdown at the end of next week.
“If there is no shutdown, report-wise we will be caught up by the end of this month,” Hart said.
“In terms of the programming for farm loans and the Farm Bill program, that is going to probably take longer. We’ll probably get deep into March or April before we fully get caught back up again.”
Beginning farmer loan programs and operating loan programs through the Farm Service Agency (FSA) were stuck in limbo for five or six weeks.
“Now we’re catching up on all the paperwork and trying to get folks that were in the application process through and approved,” Hart said.
All bets are off if another shutdown takes place.
“The timing of this potential shutdown is terrible because things will just be getting back to flowing at the time when they could possibly stop again,” Hart.