London, 21 July 2010

The U.S. Agriculture Department is making slow but steady progress on a plethora of technical trade issues with China, now the No. 3 market for U.S. farm goods, the department's top trade official said on Tuesday. Insatiable Chinese demand for U.S. soybeans, cotton, and new sales of U.S. corn have made China an increasingly important farm export destination, and there could be even more growth if the two nations can resolve a long list of trade disputes, said Jim Miller in an interview. The issues include China's ban on U.S. beef, tit-for-tat barriers on chicken, and discussions over language on U.S. export documents for dairy products.

"At least in the case of agriculture, we've got a very good working relationship with our Chinese colleagues. But these are not easy issues," said Miller, the USDA undersecretary who oversees trade, who has travelled to China four times in the past year and will go again in September.

"We have seen significant growth in our exports to China. We still have some significant border measures, but if those are corrected, it could encourage even more growth," Miller told Reuters after speaking at a U.S. Grains Council meeting.

China is forecast to buy a record $14.0 billion in U.S. farm goods in 2010, making it the largest market after Mexico and Canada, the USDA has said. But it has remain shut to U.S. beef since 2003, when the first U.S. case of mad cow disease was detected.

"We're hoping very soon to initiate technical discussions with the Chinese on how we might reach an agreement that would begin the process of reopening that market," Miller said, noting it's too soon to project when shipments might begin.

Dates for the talks have not yet been set. The U.S. government has laid out some conditions, while making it clear that it is willing to show "a certain amount of flexibility" in how trade resumes, Miller said. China recently agreed to lift a similar ban on Canadian beef, although the deal is limited to boneless beef from cattle under 30 months of age.

The chief U.S. agricultural negotiator told Reuters on Monday that the United States would seek a deal on a broader range of beef products to at least mirror its commercial arrangement with South Korea. It will be important during negotiations to establish thresholds and timeframes for trade to open to a full range of U.S. products, as allowed under guidelines from the World Organisation for Animal Health (OIE), Miller said.

"There are a lot of ways we can describe how we get to the end of the day -- but at the end of the day, we will get to a point where these countries are accepting the OIE guidelines."

Japan Ready to Engage on Beef

The USDA is also ready to request talks with Japan on its age-based restrictions on U.S. beef, Miller said, although it put off making its formal request because of a recent outbreak of foot and mouth disease (FMD) in Japan, he said. "We've received a relatively strong and positive response from (new Japanese farm minister Masahiko) Yamada that once the FMD situation is resolved, that they are prepared to engage," Miller said.

Miller said the USDA continues to work to evaluate a request from China to export cooked chicken to the United States -- the subject of a Congressional ban which in turn sparked a World Trade Organization complaint from Beijing. "We're making headway there -- not as fast as the Chinese would like -- but we're doing it in a way that is consistent with our food safety laws and the expectations of our Congress," said Miller, who held senior positions with the National Farmers Union, and Democratic Senator Kent Conrad before his USDA appointment.

The USDA is reviewing extensive documents about China's food safety laws and regulations before it can determine whether it can go ahead with inspections of Chinese processing plants, Miller said, noting the timetable for the review was not clear.

Meanwhile, China has levied antidumping and countervailing duties against U.S. chicken, shutting shipments out of its market, and has also raised concerns about the U.S. dairy export certificate, which has not yet affected shipments, Miller said.

"We have a number of issues with China where we believe that they have retaliated against some U.S. agricultural commodities in ways that are somewhat unjustified," he said.

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