U.S. Trade Representative Robert Lighthizer spent hours on the Hill Wednesday, testifying on the trade agenda to panels in both the House and Senate. But his message on the China Phase One agreement was unchanged – China will live up to terms of the deal.
He reiterated several times that he expects China will live up to terms of the deal. Lighthizer said that in “every contact I've had with the Chinese they have reaffirmed their commitment to living up to the agreement.” He also again related the view that China’s buys of soybeans will be backloaded this year. But he also expressed disappointment that some think the deal is “just soybean sales contract when it really has a lot of very, very serious parts to it.” As we have repeatedly emphasized, Lighthizer made sure to note the key changes that China has agreed to as part of the deal and the fact that it is an “an enforceable agreement.”
China has bought around $1 billion in U.S. cotton which puts them ahead of where they were in 2017, the base year that was used as the starting point for China’s purchase commitments. Lighthizer said the China commitment on cotton is “substantially north” of that $1 billion mark, but he did not say what that level is. Recall the specific purchase commitments were part of a confidential part of the accord that neither side has made public. Current purchases stand at around $10 billion, Lighthizer noted.
Lighthizer made clear that China purchases so far are still behind the levels needed to meet the commitments, particularly on energy. However, he predicted that China would “soon” be making sizable purchases of U.S. ethanol.
After all of that testimony Wednesday, President Donald Trump seemed to undercut Lighthizer on Thursday with a tweet. "It was not Ambassador Lighthizer’s fault (yesterday in Committee) in that perhaps I didn’t make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!"
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