USTR again praises China trade deal progress
US-China relations are worsening fast on nearly every front — but US trade officials strike a dissonant chord by heaping praise on China for implementing an interim trade deal signed earlier this year.
That praise is all the more surprising because China's imports from the US so far this year have fallen short of ambitious targets set by the so-called "phase one" trade agreement. The deal committed China to increasing imports from the US by $200bn in 2020-21 relative to a 2017 baseline, including a total energy imports target for China of around $27bn in 2020 and another $42bn in 2021.
But total imports from the US to China in January-September ran below 2017 levels and amounted to just 53pc of targets set by the phase one deal, according to an analysis released today by Washington think tank Peterson Institute for International Economics.
US trade officials may have tactical and political reasons for insisting the trade deal is working. The US Trade Representative's office (USTR) is hoping to build on it with a follow-up deal if US president Donald Trump is re-elected, cementing in place an arrangement that will gradually reduce China's still-substantial trade surplus in trade with the US.
The USTR is also keen to highlight progress in one particular area — agriculture — because a trade war started by Trump in 2018 temporarily cut off Chinese markets for exporters of US farm products. To date, China has met about 71pc of its 2020 target under the phase one agreement, USTR and US Department of Agriculture said in a fact sheet released on 23 October.
In dollar terms, China's agricultural imports from the US amount to the 2017 levels, Peterson Institute senior fellow Chad Bown says. "While agriculture gets the bulk of the president's attention and (USTR chief Robert) Lighthizer's attention in terms of purchase commitments, it only makes up 22pc of the goods covered in the deal," Bown says.
Data compiled by the Peterson Institute show China lagging behind on every other purchase category. "Doing worst of all is the energy," Bown says. Cumulative Chinese energy imports from the US in January-September, in dollar terms, were roughly one third of required amounts, according to the institute's analysis.
Volumes of energy trade tell a different story, highlighting one of the flaws in the agreement — setting the target purchase amounts in dollar terms, rather than volume. US crude exports to China more than doubled to 367,000 b/d in January-August. But a decline in oil prices this year means China is falling short of the energy import target.
China's crude imports from the US rose to a record high of 952,000 b/d in September. China's purchases of US crude remained strong in recent months, sometimes despite uncompetitive economics — suggesting that Beijing has been leaning on state-owned firms to keep importing from the US. Whether that trend will continue if Trump loses re-election remains to be seen.
Either outcome of the US election promises uncertainty on the future of trade relations. Trump and Democratic candidate Joe Biden at their final debate last week accused each other of not being tough enough on China. "What I would make China do is play by the international rules, not like (Trump) has done — he has caused the deficit of the China to go up, not down," Biden said.
Trump's administration, meanwhile, is accelerating efforts to decouple the two economies by introducing investment barriers and targeting Chinese technology firms with sanctions.
Related news posts
US court asked for third Citgo auction extension
US court asked for third Citgo auction extension
Houston, 19 September (Argus) — The court-appointed special master overseeing the auction of US refiner Citgo has asked the court to delay the announcement of a successful bidder to 26 September and a sale hearing to December. Special master Robert Pincus planned to make an announcement of the proposed buyer on or about 16 September followed by a November sale hearing, but last minute legal challenges derailed what have otherwise been "robust negotiations with a bidder," according to a court filing today. "The special master is continuing to negotiate sale documentation with a bidder," today's motion said. Pincus previously requested a second extension in August and a first extension in late July . By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Industry decarbonization talks mark progress: EDF
Industry decarbonization talks mark progress: EDF
Houston, 19 September (Argus) — Growing decarbonization discussions in the oil and gas industry is a sign that momentum is building toward reducing emissions, according to Mark Brownstein, senior vice president of energy transition for the Environmental Defense Fund (EDF). Brownstein, speaking on the sidelines of the Gastech conference in Houston, Texas, noted a "robust conversation" was happening to address CO2 and methane emissions from natural gas use, which was "something you would not have seen five years ago." "Now, what would really make me happy, is to come back here next year, and see that it's not just talk," he said. "That there's real investment, that there's real action and that we're actually beginning to see emissions of methane and other pollutants going down." Brownstein noted that more than 70 companies in the oil and gas industry have committed to the COP 28 decarbonization charter to get to near-zero methane emissions by 2030. "That is a commitment that needs to be expanded to all players," he said. "A commitment that needs to be expanded by investment and real action. I believe the industry can do it. But of course you need to see it." Earlier this year the EDF helped launch MethaneSAT, a satellite that will allow for real-time monitoring of global methane emissions, aimed at bringing transparency to global emissions data. By David Haydon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Fed rate cuts 'no bearing' for CCUS: NET Power
Fed rate cuts 'no bearing' for CCUS: NET Power
Houston, 19 September (Argus) — Interest rate cut by the US Federal Reserve this week have "no bearing" on carbon capture, use and storage (CCUS) projects, according to the chief executive of power technology company NET Power, since most are still in the development phase. The majority of CCUS projects are in the "pre-revenue" stage with companies that are still "more focused on the engineering" aspects, chief executive Danny Rice said on the sidelines of the Gastech conference in Houston, Texas, today. The Fed on Thursday cut its target interest rate by 50 basis points, the first cut since 2020 and following an aggressive rate increase regimen to fight inflation. Lower interests rates lower borrowing costs for companies. Rice said earlier in the day during a CCUS panel discussion there was still a need to "get capital costs down". "Historically it would be challenging to deploy a new technology and scale into a flat or declining market, but ... we're talking about decarbonization for power generation," Rice said. "Power generation is growing globally." CCUS projects and other carbon capture technologies have been repeatedly criticized by non-governmental organisations as an excuse for continued fossil fuel use, although the UN Intergovernmental Panel on Climate Change has backed the technology. Rice stressed the importance of an "objective, physics-driven view" for policy regarding decarbonization, describing CCUS projects for gas-fired powerplants as the most cost-effective method to decarbonize power. "People are going away from this exercise of 'what's clean or not'," Rice said. "What matters is the outputs. The affordability, the reliability, the carbon intensity." By David Haydon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Small private Libyan firm exports oil through blockade
Small private Libyan firm exports oil through blockade
London, 19 September (Argus) — A small Libyan private firm appears to have been granted an exemption from an oil blockade, which has more than halved the country's exports. Arkenu Oil, which describes itself as a private oil and gas development and production firm, is scheduled to export 1mn bl of Sarir and Mesla crude from Marsa el-Hariga to Italy's Trieste on the Maran Poseidon, according to an official document seen by Argus . The tanker has been chartered by Turkish trader BGN and is currently loading its cargo. This is the first Arkenu shipment set to be exported since the country's eastern-based administration ordered a blockade on oil fields and terminals on 26 August in response to an attempt by its rival administration in the west to replace the central bank governor. It is also Arkenu's third known shipment since July. Arkenu exported a 1mn bl cargo on the Zeus on 10 July and another 1mn barrel cargo on the Yasa Polaris on 16 August, according to official documents and ship-tracking data. These were also Sarir and Mesla grade. Arkenu's exports are significant given that crude sales have historically been the preserve of NOC and a handful of international oil firms that hold stakes in the country's upstream such as Eni, TotalEnergies and OMV. Arkenu, which is based in the eastern city of Benghazi, is supposedly able to export its own crude based on an agreement with NOC which allocates it an unspecified share of production from its subsidiary Agoco's Sarir and Mesla fields in return for carrying out work to boost output at the sites. But there remain questions related to the legality of the deal, the nature of the work Arkenu is supposed to be carrying out and the company's technical capabilities. The three known Arkenu cargoes are worth around $240mn at prevailing market rates, Argus estimates. There has been no increase to Agoco's production capacity since the Arkenu deal was struck, one Libyan oil industry source said. Sarir and Mesla accounted for most of Agoco's roughly 280,000 b/d output in 2023. Arkenu and NOC have yet to reply to a request for comment. "The Haftar family is deliberately and selectively allowing crude exports that generate dollars outside the Libyan state, and they are doing so within the context of a blockade they imposed," said Jalel Harchaoui, a Libya specialist at the UK's Royal United Services Institute. "While the Libyan state struggles to figure out how to import food and medicine next month owing to the central bank crisis, the Haftars' strange oil blockade permits crude exports that profit a private Libyan entity," Harchaoui added. The leadership crisis at the central bank has degraded Libya's ability to carry out international financial transactions. "The only beneficiary from these Mesla and Sarir sales is an unknown private Libyan company with an account in Switzerland and the UAE, with zero dollars being deposited in the state," the oil industry source added. General Khalifa Haftar's Libyan National Army (LNA) controls the country's east and southwest and is the real force behind the blockade. Haftar is understood to be allowing some exports to continue as long as these revenues do not reach the central bank in Tripoli, which is controlled by the rival administration in the west. Libya's crude exports have averaged 410,000 b/d so far this month, according to Kpler. While this is well below pre-blockade levels of around 1mn b/d, it is well above levels seen in some past blockades. Rising exports in recent days suggests Libya's total crude production has picked up from an earlier Argus estimate of around 300,000 b/d to possibly around 500,000 b/d. Libya was producing 1mn b/d before the blockade. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more