MNI POLICY: US Says Virus May Hurt China's Phase One Purchases

By Brooke Migdon

     WASHINGTON (MNI) - U.S. lawmakers and industry leaders on Wednesday said

the spread of coronavirus across China could affect its ability to meet purchase

targets set in the Phase One trade agreement.

     "Purchase commitments and other promises made by China as part of the

agreement may be hard-pressed to happen," House Ways and Means Chairman Richard

Neal (D-MA) said during a committee hearing. "The potential economic

consequences for an undiversified supply chain look like they can be severe."

     China agreed in December to purchase USD200 billion worth of U.S. goods

over the next two years as part of the Phase One deal. A novel strain of

coronavirus has since moved rapidly across the country, disrupting business

operations in China and rattling global supply chains.

     Economic Policy Institute president Thea Lee said at the hearing she doubts

China's ability to meet its "ambitious" purchase commitments while struggling

with the coronavirus.

     "There are serious questions as to whether these targets can or will be met

given China's slowing economic growth and the disruptive impact of the

coronavirus," said Lee, who also serves on the U.S.-China Economic and Security

Review Commission.

     "Farmers and ranchers across America are optimistic," Illinois Farm Bureau

president Richard Guebert said. There are still indications of damage already

with ships containing perishable commodities from the U.S. being held up in

China's ports, he said.

     Trade Representative Robert Lighthizer and Agriculture Secretary Sonny

Perdue said in a statement China has started implementing some of its

agriculture-related commitments under Phase One, which went into effect Feb. 14.

China also announced tariff exclusions and reductions on USD75 billion worth of

imported U.S. goods earlier this month.

     A report from the U.S. Agriculture Department published last week estimated

U.S. agriculture trade with China should "return to normal" in 2020, but would

still fall short of Phase One purchase commitments.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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