Fresh off of the signing of the Phase One trade deal three weeks ago between the U.S, and China, concern is rising on whether the coronavirus outbreak in China will impact the country’s ability to meet its purchase commitments. Earlier this week, reports that China will seek “flexibility” from the U.S. on the deal were centred on the disease’s possible economic impact.
Some are scratching their heads over the very public ask, as Reuters’s reporter Karen Braun says this situation is accounted for in the deal text:
Bloomberg reporting that #China seeks flexibility on Phase 1 trade targets amid the coronavirus outbreak. The deal says the two sides can consult “in the event that a natural disaster or other unforeseeable event” delays either side from complying.https://t.co/rkFe3ccD9r
— Karen Braun (@kannbwx) February 3, 2020
Agri-Pulse reported that U.S. Trade Representative Robert Lighthizer was not “aware of reports about the impact of the coronavirus on China’s ability to fulfill commitments made during recent trade negotiations but has yet to formally hear from his counterparts there.”
“Until China formally asks for ‘flexibility’ the context of the request will be pure speculation,” says RealAgriculture’s Shaun Haney.
Under the Phase One deal, China has committed to purchase US$80 billion in agriculture products over the next two years, but the market has been left waiting as selling pressure has dominated the daily trading of ag commodities since the deal was signed. (Hear more analysis here).