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Markets Feel Good about Thursday Reports of Trade Progress



China is proposing additional purchases of U.S. agriculture products as trade talks ramp up with the United States. Bloomberg reported Thursday morning the offer would be on top of pre-trade war levels and continue for an undefined period of time. Arlan Suderman of INTL FCStone, expressed caution, noting “China will say what needs to be said to get a deal, but the key component will be in the verification and enforcement.” The talks face a March 1 deadline, although President Trump has recently suggested he would consider extending the deadline.

The reports Thursday indicate China and the U.S. will sign 6 memorandums of understanding to meet this country’s demands, and 10 commodities are listed. Annual sales would reportedly exceed $30 billion over and above the sales to China in 2017, which totaled over $24 billion.

But this is not yet a deal, so USDA Secretary Sonny Perdue says it is too early talk about specifics of any possible agriculture sales to China.

“I think that would all be very premature because those proposals are all contingent upon a grand deal,” he said.

There are also the unresolved structural reforms concerning intellectual property guarantees the U.S. wants.

“If we could get those kinds of assurances regarding China taking intellectual property theft seriously, then we could see a renewed and expanded agricultural trade between the two countries. They have committed quantities that are significant.”

Perdue, speaking at the USDA Outlook Forum Thursday, said biotech remains a concern.

“We still have some real challenges when it comes to acceptance of those biotech traits that we think would be very helpful,” he said, “and China has been somewhat intransigent in their acceptance and agreement to those types of policies as well.”

And then there’s the question about when the new U.S. Mexico Canada Agreement trade deal will go into effect. There are still hurdles to jump to get the three countries to ratify it, but Perdue said, “It is a better agreement. I would be willing to debate that point by point with anyone.”

The secretary speculated about when the United States will get the agreement to the President.

“I would hope certainly, I’m always optimistic, by summer.”

Some lawmakers say USMCA doesn’t address labor and environmental issues.

“We have improved this agreement in every sector including labor.”

Perdue was with representatives from Canada and Mexico who did not speculate on final passage of the agreement in their countries.