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China seems to be retaining its commerce guarantees, says Biden's Agriculture Minister

US Secretary of Agriculture Tom Vilsack

Almond Ngan | AFP | Getty Images

Agriculture Secretary Tom Vilsack believes China will keep its promises it made under the landmark Phase 1 trade deal with the US last year.

Vilsack said the deal allows market conditions to dictate how much Beijing will need to buy from US farmers. The Covid pandemic, he added, would qualify as a material market condition that would affect how much China will have to buy.

"The good news is that China seems to be living up to its responsibilities," he said on Wednesday. "The bad news is, at any point in time, due to the complexity of China-US relations, things can happen that can affect these purchases."

After months of negotiations and a rampant tariff feud, China and the Trump administration reached an agreement in January 2020 that would allow Beijing to buy another $ 200 billion in goods over a period of two years. The additional purchases are said to be on top of the amount of goods and services Beijing purchased in the US in 2017.

In particular, China agreed to purchase $ 12.5 billion in agricultural goods in 2020, followed by an additional $ 19.5 billion in 2021. US soybean and pork purchases by the country continued during of the bilateral talks in 2018 and 2019.

However, some reports indicate that China did not purchase the amounts promised prior to the Covid-19 pandemic, even if the rules of the trade agreement allow changes in market conditions based on the purchase amounts.

In its first year of implementation, China imported $ 100 billion of the U.S. goods agreed under the deal – around 58% of the targeted $ 173.1 billion for 2020, according to Chinese customs data published by the Peterson Institute for International Economics were compiled.

Even so, Vilsack remained optimistic about China's progress.

"I think you have a few days left to reach the goal of the first phase, the first year," he said. "Whether or not they will reach exactly what I think is questionable in part because of the pandemic."

Vilsack, who took office on Wednesday, was also Secretary of Agriculture under former President Barack Obama and was previously Governor of Iowa. His re-nomination to President Joe Biden was slightly endorsed in the Senate, who voted 92-7 on Tuesday to reapply the former dairy manager for a second term.

Earlier this month, Vilsack was asked by the Senate Agriculture Committee about his views on US trade policy and climate change. He promised to use the funds contained in the Commodity Credit Corporation to extract atmospheric carbon.

Vilsack is expected to attempt to address various challenges in the U.S. farming world, including rising hunger in the pandemic but a sharp drop in food demand in restaurants.

Civil rights groups have also raised concerns about his nomination, alleging that alleged discriminatory practices at the USDA continued under his previous tenure.

– CNBC's Yen Nee Lee contributed to this report.

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