With Key Trade Agreement Ignored, RFA Calls for Reciprocal Duties on Chinese Ag Imports

(Renewable Fuels Association) The Renewable Fuels Association today thanked the Trump administration for its efforts to enforce an important 2019 trade agreement with China, noting in comments to the U.S. Trade Representative that China has failed to satisfy commitments to increase trade in ethanol and distillers grains. Accordingly, RFA calls on the United States to implement reciprocal duties on U.S. imports of Chinese ag products.

“On behalf of RFA’s membership, and the U.S. ethanol industry as a whole, we are extremely grateful to President Trump and his Administration for its steadfast commitment to fair and reciprocal trade with China,” wrote RFA President and CEO Geoff Cooper. “We applaud USTR for taking a closer look at China’s failure to deliver on its Phase One commitments, which has resulted in a lost market opportunity for U.S. ethanol producers and farmers and caused significant financial losses.”

Cooper noted that China purchased only 58 percent of the total U.S. goods and services exports in 2020 and 2021 that it had committed to buy under the Phase One Agreement signed in 2019. In fact, China ultimately failed to buy any of the additional $200 billion in goods in 2020-21, instead falling $11.6 billion short of even reaching the baseline level of purchases.

Specifically, with respect to ethanol, after the signing of the Phase One Agreement, in 2020, China purchased just 31.7 million gallons of ethanol from the U.S. valued at just under $51 million. Thereafter, in 2021, China purchased just over 100 million gallons of ethanol from the U.S. valued at $162 million. Since 2021, U.S. ethanol imports by China have essentially fallen to near zero and flatlined. A similar trade pattern occurred with respect to distillers grains.

“Today, as our nation’s farmers and rural communities face serious economic challenges, it is critical that our trading partners live up to their commitments and be held accountable for failing to comply with key terms and provisions negotiated in the process,” Cooper concluded. “Moreover, trading partners must act in good faith as we work to negotiate longer-lasting, more resilient trade agreements. It is critical that China work to restore its commitment to agriculture purchases under the Phase One Agreement or otherwise face reciprocal action for its failure and/or refusal to do so.”

Excerpt from Brownfield Ag News: China currently levies a 70% tariff on U.S. ethanol imports, which Cooper says makes accessing the market impossible.

“In 2016, they were our leading market for distillers grains exports. Half of all U.S. exports of distillers grains were going to China.” He says, “Around that same time, about 20% of total ethanol exports were going to China. So, it was an important market. We saw it as a growing market, and the wheels came off.”

He tells Brownfield that RFA would like to see the investigation result in the removal of Chinese trade barriers or renewed purchase commitments.

“Even without a commitment for guaranteed purchases or guaranteed volumes, if they just remove that tariff, we believe the free market would certainly allow greater volumes, greater shipments of U.S. ethanol into that marketplace,” he says.

If China fails to address the situation, Cooper says RFA is calling on the United States to implement further reciprocal duties on U.S. imports of Chinese ag products.

“The ultimate goal is to get China to the table to talk about a path forward that works better for both of our countries,” he says.

The U.S. Trade Representative’s next hearing on the case is set for December 16th. READ MORE; includes AUDIO

Sorghum Surplus & Push for China to Make Good on Biofuel Pledge

Sorghum growers are also hoping China soon steps up to the plate as the crop piles up across the Midwest. While ethanol is consuming a lot of those supplies, trader Brady Huck with Advanced Trading told RFD-TV News they really need China to make some more purchases.

“We’ve got a great milo crop, grain sorghum crop out here in the Plains -- Kansas being a big producer, the Texas Panhandle being another big producer,” Huck said. “And those bushels just are getting backstopped and backfilled into ethanol production. And ethanol production has been strong for us, but we really need to see China come to the table with an export program to buy some of those bushels. And we’ve got the bushels. It’s a great product. It’s a great grain [and a] great feedstock. We just need a little help to get those bushels shipped overseas, where they can be used.”

If China were to return for more U.S. sorghum, Huck explained, basis would likely see some dramatic swings, which is something U.S. milo growers are eager to see. READ MORE;includes VIDEO