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Skepticism Remains over China Deal

Commodity markets have done relatively little in reaction to the phase one trade agreement between the U.S. and China. 

Trade expert Jim Bower in his daily newsletter, states there “remains a lot of skepticism” regarding the agreement, suggesting it’s “unclear” how China can manage to increase purchases of U.S. agricultural products. 

The agreement reportedly includes $40-$50 billion in annual purchases of U.S. ag products by China for two years. 

And, a fact sheet on the agreement states that the agriculture provisions address “structural barriers to trade,” and will support a “dramatic expansion” of agricultural exports.

The agreement, expected to be signed in early January, received cautious praise from U.S. agriculture. 

U.S. Trade Representative Robert Lighthizer told CBS over the weekend regarding the phase one agreement, “This is totally done. Absolutely.” The U.S.-China Business Council called the agreement “an encouraging first phase,” while adding, “but, this is just the beginning.” 

The council says both sides “must commit to developing a new paradigm and economic relationship.”

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