How trade with China happens

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With $13 billion worth of ag products sent to China last year out of a record $115 billion in total ag trade, this country is one of our best trade partners. But trade doesn't just happen, as I've been learning during my trip here with the Illinois Farm Bureau Market Study Tour. Trade takes place only after drawn-out discussions, negotiations, research and lots of behind-the-scenes conversations. 

According to Eric Barbori, who works in the political sector at the U.S. Embassy here in Beijing, there are 50 to 60 dialogues going on at any time between officials of both of our governments. Those conversations concern everything from economics to security to environmental issues.

"We'll always have our differences, especially in things like human rights,•bCrLf he says. "But we're always trying to find areas of agreement no matter who occupies the White House.•bCrLf For example, China and The U.S. are the two biggest greenhouse gas offenders in the world, so climate change is an area of keen interest to both sides.

China's foreign policy is focused on stability around them so the country can continue its internal domestic growth — areas like population, jobs, and development. While we treat someone like the Dali Lama as a religious figure, they see him as a separatist who doesn't promote their internal growth.

One challenge for our Foreign Ag Service in China is dealing with the strange hierarchy of the communist party. No matter how much you hear about free markets, China is still communist at heart. Within the communist party you may occasionally hear about issues that get voted upon, but it's still just one party.

Quid pro quo Osvaldo Perez, who heads up APHIS (Animal and Plant Health Inspection Service) at the embassy, is charged with making sure any exports from China to the U.S. are disease-free. But that's just the tip of the iceberg. APHIS provides the Chinese with technical assistance to modernize their trade protocols and become more science-based. One entire section of APHIS is dedicated to reviewing Chinese regulations to make sure they are not trade prohibitive. When a group from the U.S. wants to sell products to China, it's up to APHIS to try to get the protocols approved. The problem is, China is not always straight-forward or transparent, as was the case recently regarding an avian flu outbreak.

The Chinese also like to go tit for tat on trade issues — if China gives us market access to sell our pears in China, they want something else in return. China wants to sell us asian pears, bonsai trees, cooked poultry, and apples. These are sticking points in our trade relationship.

Keeping the soy pipeline humming Every week during the shipping season (September-April), $250 million worth of U.S. soybeans arrives at Chinese ports, says Ag Attaché Mark Petry. That's 60% of all exported U.S. soybeans. But even that commodity has had some sticking points. Some treated seeds end up going into bulk shipments, and China has a zero tolerance policy for soy. APHIS has encouraged the Chinese to use science-based protocols to develop their standards, adds Bill Westman, Minister Counselor for Agricultural

Affairs at the U.S. Embassy. He says most contamination levels for treated seed in a bulk shipment are around .00001,  well within scientific limits for human health.

"China's inspection system is not very scientific,•bCrLf says Westman (left). "They will send guys out on a boat to meet the Panamax vessel while at anchor. They will come on board and look around and if they see one seed that looks like it's been treated they will raise a red flat with the shippers.•bCrLf

Even so, there are a lot of great success stories to come out of FAS and APHIS. In 2007 the U.S. began shipping small amounts of alfalfa hay to China. China, concerned about insects, wanted the alfalfa to be fumigated, which is costly. "We invited them to the U.S. to show how it works and prove we don't need to fumigate to control pests,•bCrLf says Perez.

The Chinese agreed and ended up buying 400,000 metric tons of alfalfa the next year.

Next: An inside look at China's agriculture

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