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2020 is Ending: Will Phase One Deal Exports Hit the Mark?

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Archives, Global Trade Daily, Imports/Exports

2020 is Ending: Will Phase One Deal Exports Hit the Mark?

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You may have heard about soybeans lately. After a tumultuous year, the crop’s futures surged above $10.70 in October, in large part because of sales to China. The world’s second-largest economy bought more than 17 million tons of soybeans in the current marketing year, according to the Department of Agriculture, surpassing both 2019 and 2018 figures. This buying frenzy pushed prices to a two-year high.

Some of it can be attributed to phase one trade deal between the world’s two largest economies. In January, the United States agreed to lower tariffs on $120 billion worth of Chinese goods. In exchange, China agreed to beef up its imports by $200 billion above 2017 levels over a two year period.

The commitment included soybeans, but it extended to other products too. China committed to importing an additional $77 billion in 2020, made up of $12.5 billion in agricultural products, $32.9 billion in manufactured goods, $18.5 billion in energy products, and $12.8 billion in services. In 2021, that number will increase to $123 billion.

So how are actual exports stacking up? Will China hit those goals this year?

‘The answer is no,’ says Dr. Chad Brown, a Senior Fellow at the Peterson Institute for International Economics. ‘The agreement itself is written to have an overall target and four sector-specific targets – agriculture, manufacturing, energy, and services. There’s a chance we could get there for agriculture, but not for energy or manufacturing.’

According to the Peterson Institute’s US-China Phase One Tracker, China is behind on purchases in each of these categories. By the end of the third quarter, the country imported $65.9 billion worth of goods. In order to reach the 2020 target, China would have to purchase another $110 billion in the last three months of the year. Forces outside of trade policies are making that difficult or impossible.

Agriculture has the most robust sales so far. Corn and pork exports both exceeded targets for the year, and cotton is on track to meet its goal. But purchases of other products, like wheat and sorghum, are nowhere near their target numbers. Even soybean sales are below target, in spite of the rally this fall. It spells trouble for agriculture exports overall. ‘You’re not going to make up lost soybean sales with pork or lobster or any of that, we just don’t sell nearly enough of that other stuff,’ Brown explains.

Sadly, manufacturing is much further behind. While PPE and semiconductor sales were healthy, automotive and aerospace products (typically some of the largest exports to China by dollar amount) were nowhere close. ‘Before the trade war, China was the second-largest export market for American vehicles, after Canada. Now, tariffs imposed on imports from China made autos more expensive. If you are making a car in the United States, it suddenly costs a lot more to do so,’ says Brown.

By the end of September, auto products had only reached a quarter of their goal. Chinese aircraft imports were little more than 10% of the pledged amount for 2020.

Energy commitments are farthest off the mark. This year, China imported $5.9 billion worth of products from the United States. That’s more than in 2017, but not ‘$200 billion commitment’ more. At $4.4 billion, crude oil purchases are at about half of where they should be to reach their goal. Meanwhile, coal and refined energy are nowhere close. As Dr. Brown explains, the commitments were made in dollar amounts, and as we are all painfully aware, oil prices have been extremely unstable this year. ‘You could pull all the oil out of Texas that exists, but if the price is either zero or negative, you’re not going to make any progress towards these purchase commitments.’

These commitment levels would have been a stretch during a typical year. But of course, 2020 has been anything but typical. As it stands, no United States industry is likely to reach its goals this year, and in 2021, the gap will only widen.

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Archives, Global Trade Daily, News

USTR to Consider Extending List 1 Exclusions Past October 2nd Expiration Date

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On August 3, 2020, the Office of the U.S. Trade Representative (USTR) issued a notice requesting comments on whether to extend specific exclusions on Chinese imports from the Section 301 List 1 that are set to expire on October 2, 2020. Companies whose List 1 Exclusions products were granted exclusions in notices published on October 2, 2019, December 17, 2019, and February 11, 2020 are eligible to submit comments.

The due date for companies to submit their comments is August 30, 2020. USTR has stated that it will focus its evaluation on whether, despite the first imposition of these additional duties, the particular product remains available only from China. Additionally, USTR encourages companies to specifically address the following in their submission:

-Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.

-Any changes in the global supply chain since July 2018 with respect to the particular product or any other relevant industry developments.

-The efforts, if any, the importers or U.S. purchasers have undertaken since July 2018 to source the product from the United States or third countries.

-Whether the imposition of additional duties on the products will result in severe economic harm to the commenter.

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Turner Kim is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

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Archives, Global Trade Daily, International Trade

U.S. Textile Bag And Canvas Market – China’s Imports Bounces Back after Two Years of Decline

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IndexBox has just published a new report: ‘U.S. Textile Bag And Canvas Market. Analysis And Forecast to 2025’. Here is a summary of the report’s key findings.

The revenue of the textile bag and canvas market in the U.S. amounted to $7B in 2018, increasing by 7.8% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +6.4% over the period from 2013 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being observed throughout the analyzed period. The pace of growth was the most pronounced in 2014 with an increase of 18% against the previous year. Over the period under review, the textile bag and canvas market attained its maximum level in 2018 and is expected to retain its growth in the near future.

Production of Textile Bags And Canvases in the U.S.

In value terms, textile bag and canvas production amounted to $4B in 2018. The total output value increased at an average annual rate of +8.3% from 2013 to 2018; the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2014 when production volume increased by 20% against the previous year. Textile bag and canvas production peaked in 2018 and is expected to retain its growth in the immediate term.

Exports from the U.S.

In 2018, the amount of textile bags and canvases exported from the U.S. stood at 6.5K tonnes, growing by 51% against the previous year. Over the period under review, textile bag and canvas exports, however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2018 with an increase of 51% y-o-y. Over the period under review, textile bag and canvas exports reached their peak figure at 7K tonnes in 2014; however, from 2015 to 2018, exports stood at a somewhat lower figure.

In value terms, textile bag and canvas exports totaled $47M (IndexBox estimates) in 2018. Overall, textile bag and canvas exports, however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2017 when exports increased by 36% against the previous year. Exports peaked at $59M in 2014; however, from 2015 to 2018, exports failed to regain their momentum.

Exports by Country

Thailand (578 tonnes), Australia (567 tonnes) and Trinidad and Tobago (464 tonnes) were the main destinations of textile bag and canvas exports from the U.S., with a combined 25% share of total exports. These countries were followed by Viet Nam, Poland, China, India, Russia, Malaysia, Nicaragua, the Dominican Republic and Costa Rica, which together accounted for a further 46%.

From 2013 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Viet Nam (+1,030.1% per year), while the other leaders experienced more modest paces of growth.

In value terms, the largest markets for textile bag and canvas exported from the U.S. were Poland ($7.6M), Australia ($6.7M) and the Dominican Republic ($4.4M), with a combined 40% share of total exports. Costa Rica, China, Trinidad and Tobago, India, Nicaragua, Viet Nam, Thailand, Malaysia and Russia lagged somewhat behind, together comprising a further 18%.

In terms of the main countries of destination, Viet Nam (+393.6% per year) recorded the highest rates of growth with regard to exports, over the last five years, while the other leaders experienced more modest paces of growth.

Export Prices by Country

The average textile bag and canvas export price stood at $7,219 per tonne in 2018, waning by -45.8% against the previous year. Overall, the export price indicated a slight increase from 2013 to 2018: its price increased at an average annual rate of +1.3% over the last five years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The growth pace was the most rapid in 2017 when the average export price increased by 52% against the previous year. In that year, the average export prices for textile bags and canvases reached their peak level of $13,329 per tonne, and then declined slightly in the following year.

There were significant differences in the average prices for the major foreign markets. In 2018, the country with the highest price was Poland ($17,736 per tonne), while the average price for exports to Russia ($272 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was recorded for supplies to the Dominican Republic (+55.6% per year), while the prices for the other major destinations experienced more modest paces of growth.

Imports into the U.S.

In 2018, the textile bag and canvas imports into the U.S. totaled 351K tonnes, rising by 8% against the previous year. The total import volume increased at an average annual rate of +2.1% over the period from 2013 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations in certain years. The most prominent rate of growth was recorded in 2018 with an increase of 8% against the previous year. Over the period under review, textile bag and canvas imports attained their maximum at 360K tonnes in 2015; however, from 2016 to 2018, imports remained at a lower figure.

In value terms, textile bag and canvas imports totaled $1.5B (IndexBox estimates) in 2018. Overall, textile bag and canvas imports continue to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2018 with an increase of 8.9% against the previous year. Imports peaked at $1.6B in 2015; however, from 2016 to 2018, imports failed to regain their momentum.

Imports by Country

In 2018, China (197K tonnes) constituted the largest supplier of textile bag and canvas to the U.S., with a 56% share of total imports. Moreover, textile bag and canvas imports from China exceeded the figures recorded by the second-largest supplier, India (83K tonnes), twofold. The third position in this ranking was occupied by Bangladesh (25K tonnes), with a 7.1% share.

From 2013 to 2018, the average annual growth rate of volume from China amounted to -2.2%. The remaining supplying countries recorded the following average annual rates of imports growth: India (+13.0% per year) and Bangladesh (+7.4% per year).

In value terms, China ($905M) constituted the largest supplier of textile bag and canvas to the U.S., comprising 62% of total textile bag and canvas imports. The second position in the ranking was occupied by India ($218M), with a 15% share of total imports. It was followed by Bangladesh, with a 8.4% share.

From 2013 to 2018, the average annual rate of growth in terms of value from China stood at -3.0%. The remaining supplying countries recorded the following average annual rates of imports growth: India (+11.5% per year) and Bangladesh (+5.9% per year).

After two years of decline, Chinese imports of textile bag and canvas into the U.S. rebounded in 2018, with an increase of 8.5% y-o-y.

Import Prices by Country

In 2018, the average textile bag and canvas import price amounted to $4,139 per tonne, standing approx. at the previous year. In general, the textile bag and canvas import price, however, continues to indicate a temperate descent. The growth pace was the most rapid in 2018 an increase of 0.8% against the previous year. Over the period under review, the average import prices for textile bags and canvases attained their maximum at $4,572 per tonne in 2013; however, from 2014 to 2018, import prices remained at a lower figure.

There were significant differences in the average prices amongst the major supplying countries. In 2018, the country with the highest price was Bangladesh ($4,877 per tonne), while the price for India ($2,627 per tonne) was amongst the lowest.

From 2013 to 2018, the most notable rate of growth in terms of prices was attained by Indonesia, while the prices for the other major suppliers experienced a decline.

Companies Mentioned in the Report

Dhs Systems, Rainier Industries, Covercraft Industries, Duluth Trading Company, North Sails Group, J & M Industries, Anchor Industries, Thomas Sign and Awning Company, Holland Awning, Outdoor Research, Hdt Expeditionary Systems, Veada Industries, C. R. Daniels, Bestop, Starr Aircraft Products, ADM Corporation, Kenneth Fox Supply Company, Polytex Fibers, Adco Products, Marine Accessories Corporation, Gleason Corporation, Webasto-Edscha Cabrio USA, Outdoor Venture Corporation, Magna Car Top Systems of America, Mpc Group, Ajr Enterprises, Targus Group International, Bluewater Defense, Mondi Bags Usa

Source: IndexBox AI Platform