Trade pact welcomed, cautiously, in Minnesota

Farmers and agricultural businesses in Minnesota applauded the trade deal President Donald Trump signed Wednesday with China, but many said they hoped he would open trade further with the world's second-largest economy.

"It's positive. It's moving in the right direction," said Bill Gordon, a farmer near Worthington, Minn., and leader in the American Soybean Association who attended the signing ceremony.

"This is what we needed, we needed to get in the same room and talk," he added. "Now we've signed the deal. Now we need to implement it."

With it, Trump and Chinese Vice Premier Liu He took a step to calm a trade war that began in the steel industry in the spring of 2018 and spread across many others.

China committed in the deal to purchasing an additional $200 billion in U.S. goods and services by 2021. Of that, China will import about $12 billion in agriculture products this year and another roughly $20 billion next year.

China is also expected to ease, but not eliminate, some tariffs it has placed on U.S. goods when it retaliated to barriers on steel imposed by the U.S.

The U.S. will maintain the bulk of its $360 billion in tariffs on Chinese goods. And Washington may take other steps if Beijing does not follow through on the terms of the deal.

The pact marks a shift in U.S. trade policy. Rather than lowering tariffs and other economic barriers to allow for the flow of goods and services to meet market demand, the deal leaves tariffs in place and stipulates that China buy $200 billion worth of specific products within two years. Instead of trying to change China's approach, the agreement leans into it by requiring Beijing to buy set amounts of certain goods and services.

Agriculture leaders in Minnesota Wednesday were cautiously optimistic, but they expressed discomfort with the policy shift.

Restoring market signals to trade with China should be a priority, said John Griffith, senior vice president of global grain marketing and renewable fuels for Inver Grove Heights-based CHS Inc.

"The agricultural targets in the agreement are a significant shift upward, and that is a positive for agriculture," Griffith said in a statement. "I'm hopeful execution against those targets can be done in the most market-based approach possible to provide appropriate signals to farmers, the market and ag supply chain."

Mike Steenhoek, director of the Iowa-based Soy Transportation Council, said the deal "provides farmers some optimism" but warned that a one-off does little for U.S. farmers, and the future predictability of Chinese soybean purchases is "essential" to the trade relationship.

The deal does not resolve structural issues surrounding China's approach, such as its pattern of subsidizing and supporting key industries that compete with U.S. firms, like solar and steel. U.S. businesses blame those economic practices for allowing cheap Chinese goods to flood the U.S. market, putting domestic firms out of business.

Instead, like the presidents who preceded him, Trump plans to rely on allies and the World Trade Organization to try and push China to change its ways.

The agreement also fails to address cybersecurity and China's tight controls over how companies handle data and cloud computing. China rejected U.S. demands to include promises to refrain from hacking U.S. firms in the text, insisting it was not a trade issue.

The administration has said it will address some of these changes in the next phase of the negotiations.

Before the deal was signed Wednesday it was already under fire from top Democrats. Sen. Chuck Schumer, the minority leader from New York, criticized it for failing to address China's state-owned enterprises and industrial subsidies. He suggested that President Xi Jinping was privately laughing at the United States over the weakness of the deal and that China has "taken President Trump to the cleaners."