New Delhi — The Regional Comprehensive Economic Partnership, the world's largest free trade pact that China joined in late 2020 and which will likely take effect from mid-2021, will not have any major impact on US soybean and corn exports to China in the near future, the US Department of Agriculture said Feb. 17.
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This statement emerged amid ongoing talks in the market on whether the RCEP deal will negatively impact US-China trade.
China, one of the world's largest agricultural importers, joined 14 Asia-Pacific countries Nov. 15, 2020, under the RCEP free trade agreement.
It is expected to continue purchasing soybeans, corn, and other bulk commodities from the US despite the RCEP deal, boosting US prices, analysts said.
Over 60% of the US' annual agricultural exports to China comprise of bulk commodities such as soybeans and corn, with a total value of over $9.1 billion, a Beijing-based agricultural consultancy said. None of the RCEP member nations have the capacity to replace US agricultural exports to China, at least for the next 25 years, it said.
For those products that receive preferential treatment under RCEP, such as soybeans, no Asia-Pacific countries compete with the US, the USDA said. Alternatively, corn, wheat, rice, and cotton, fall under China's tariff rate quota regime that supersedes any RCEP tariff reductions, it said.
The US, along with Brazil -- the world's top soybean suppliers -- account for over 90% of China's annual soybean imports.
According to analysts, China is expected to import over 100 million mt of soybeans in 2021, with Brazilian and US shipments accounting for 55% and 35%, respectively.
The RCEP agreement's member countries consist of the Association of Southeast Asian Nations, or ASEAN -- Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Brunei, Cambodia, Myanmar and Laos -- and five other countries in the Asia-Pacific region -- Australia, China, Japan, South Korea and New Zealand.
The RCEP will take effect after at least six ASEAN countries and three non-ASEAN countries ratify the agreement, the USDA said.