US reaches deal to allow exports of natural gas, beef to China

Toluse Olorunnipa
Bloomberg News (TNS)

WASHINGTON — The U.S. reached an agreement for China to provide greater access to U.S. natural gas exporters as part of a broader effort to begin reshaping the trade relationship between the world’s two largest economies, Commerce Secretary Wilbur Ross said May 11.

The agreement covers 10 areas where trade negotiators from the U.S. and China have reached consensus, including agricultural trade and market access for financial services.

By mid-July, U.S. beef producers will have broader access to Chinese markets, while America will move forward on allowing the import of cooked poultry from China, according to a joint statement announcing the deal.

By mid-July, U.S. beef producers will have broader access to Chinese markets, while America will move forward on allowing the import of cooked poultry from China, according to a joint statement announcing the deal.

Ross said officials from Dow Chemical Co. gave assurances that increasing exports of natural gas wouldn’t harm the U.S. industry or consumers if sales remained less than 30 percent of total output. He said a similar deal for coal exports to China wasn’t likely, given the far shipping distances.

“This will let China diversify, somewhat, their sources of supply and will provide a huge export market for American LNG producers,” Ross told reporters at a White House briefing on Thursday, using an acronym for liquefied natural gas.

The agreement, which grew out of a 100-day action plan announced during an April meeting between President Donald Trump and Chinese President Xi Jinping, reflects daily negotiations with officials in China, Ross said. It represents the first negotiated pact on trade for Trump, who campaigned for office saying he would get tough on China over unfair trading practices. Trump has since softened his tone as he’s sought the country’s cooperation in mitigating the nuclear threat from North Korea.

While Trump made the revival of America’s coal industry a hallmark of his campaign, his administration seems to be acknowledging the potential jobs bonanza offered by the two dozen applications to build LNG export terminals currently under review. Gary Cohn, director of the National Economic Council, has voiced support for an LNG terminal in the U.S. Northwest that would ship overseas to Asia.

Ross said the agreement would help to reduce the growing U.S. trade deficit with China — the country’s largest, totaling $347 billion in 2016 — and help lead to additional negotiations over the next year that could address other parts of the relationship.

“This was pretty much a herculean accomplishment to get this done,” he said. “This is more than has been done in the whole history of U.S. - China relations on trade.”

The announcement seems to build on or repeat some commitments that China has already made.

China agreed to give “full and prompt market access” to payments companies, such as Mastercard Inc., Visa Inc. and American Express Co. The U.S. brought a case against China on its electronic payment services market in 2010. After a World Trade Organization panel ruled against it in 2012, China issued new industry guidelines in 2015 that it said would clear the way for foreign firms.

Also in the plan, China agreed to allow foreign-owned firms to provide credit ratings by July 16. China’s Ministry of Commerce and National Development and Reform Commission had already proposed draft regulations in December that would have opened up that market. China will issue both bond underwriting and settlement licenses to two qualified U.S. financial institutions as well.

In a win for U.S. agriculture, the deal opens China to U.S. beef exporters, who have long wanted access to its more than 1.3 billion people. China banned American imports in 2003 after an outbreak of mad-cow disease.

The U.S. industry has been pushing for the ban to be removed so that it can help tap into the burgeoning demand of China’s middle class. Trump declared success last month in gaining greater access to China for U.S. beef suppliers following meetings with Xi. U.S. industry groups value the Chinese beef-import market at about $2.6 billion.

Under the agreement, after one more round of technical consultations, China will “allow imports of U.S. beef on conditions consistent with international food safety and animal health standards” as soon as possible and starting no later than July 16, according to the joint statement.

The deal also paves the way for China to export cooked poultry to the U.S. The U.S. will publish a proposed rule by July 16 to help jump-start the imports, it said.

Additionally on agriculture, China’s National Biosafety Committee will hold a meeting by the end of this month to evaluate eight pending U.S. biotechnology product applications. Biotechnology includes genetically modified organisms for plants such as corn and cotton.

As part of the agreement, the U.S. recognized “the importance of China’s One Belt and One Road initiative,” and will send delegates to attend the Belt and Road Forum in Beijing on May 14 - 15, according to the joint statement.

The two sides didn’t discuss whether the U.S. would join the Asian Infrastructure Investment Bank, Ross said.

Mario Parker, Zeke Faux, Millie Munshi and Ryan Collins contributed to this report.