US-China pact could wipe out Brazil ag exports to China by $10bn: study

A US-China trade deal could wipe $10 billion off the value of Brazilian agricultural exports to China, according to a forecast from a Brazilian research agency.

The forecast by Insper is based on statements by US Trade Representative Robert Lighthizer that China would buy an additional $32 billion of US agricultural goods over two years on top of the $24 billion it purchased in 2017.

“In an optimistic scenario for Americans where they can export $30 billion to the Chinese, as it did at its peak, China would still have to find a way to the other $25 billion,” said Marcos Jank, coordinator of Insper Agro Global.

“Part of that will come from what we export today. So it is possible that we will return to the pre-trade war level losing about $10 billion in exports of agricultural products,” he told local newspaper Folha de S.Paulo.

As well as soybeans, Jank estimates that in order for China to meet the new purchasing target, other commodities will need to be bought in record levels, including chicken, beef, pork and cotton.

Brazil exports about $2.5 billion of these goods to China annually.

However, while warning that the trade deal could be severely damaging for Brazil’s exports to China, Jank said a crop failure in the US this season means a ramp up to $40-55 billion per year seems unlikely, adding that if it happened it would be challenged at the WTO.

“The Chinese cannot grant another WTO country privileged treatment without making the same concession to the other member countries. The only other way to do that is by using their state-owned companies to make purchases,” he said.