U.S., China set to sign new trade agreement, major implications - FOX34 Lubbock

U.S., China set to sign new trade agreement, major implications for ag

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LUBBOCK, Texas -

The United States and China are set to sign a "phase one" trade agreement Wednesday, a move expected to calm the ongoing stand-off between the two largest economies in the world.

The two countries have been in a trade war for the last couple years, with both countries imposing tariffs on each other, trying to come to an agreement on fair trade.

Kody Bessent, with Plains Cotton Growers, said the move is a big deal for ag.

"China has been on the forefront of production ag, and trying to create fair level paying field within the world market for a long time, so most are very excited by the fact that the administration has reached an agreement with China," Bessent said.

All the details of the deal are still confidential, but Bessent said this preliminary agreement is a good start.

"Hopefully with the commitments the administration has made with China, there's $200 billion of commitments purchase of all commodities, cotton being included in that. There's nothing specific in the quantity of amount, but certainly, we're hopeful it'll be more than what the 2017 baseline was," he said.

Bessent hopes the agreement will provide underlying support for the marketplace, which producers "vastly" need. He said prices have been well below the cost of production for the last two years.

"It'll take some time to rebuild that market share. Prior to going into the trade war, we had about 46 percent share of the Chinese market, cotton specific. Since that time, we've slowly diminished to 18 percent, so it'll take some time to rebuild that market share," he said.

The endgame here is to hold both the U.S. and Chinese governments accountable on the commitments both sides have made, Bessent said, and to ensure China follows through on buying U.S. goods.

"It'll take some time for it to go into full force, as I've mentioned with several folks, we didn't get to this position overnight, certainly with the signature of this agreement, that's a step in the right direction," Bessent said.

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