Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. TREADING SOFTLY ON CHINA AG: The United States needs to develop as many new agricultural markets as it can, but that doesn’t mean giving up on China, its No. 1 market last year, because of a risky overreliance, top U.S. trade officials said Thursday. “Do we not expend resources there because of the potential for closure?,” chief agricultural negotiator Doug McKalip said during a discussion at USDA’s annual Agricultural Outlook Forum. “To me, that doesn’t really compute.” Gimme five: Despite current tensions between the U.S. and China, the Asian heavyweight will likely be a top tier export market for U.S. farm goods for at least the next five years, added Alexis Taylor, USDA undersecretary for trade and foreign agricultural affairs. “So we have to invest in that relationship and have to spend time working on market access issues that our products are experiencing to make sure our products can get into that market with as little hurdles as possible,” Taylor said. China imported slightly more than $36 billion worth of U.S. farm goods in fiscal 2022, which ended Sept. 30, accounting for about 19 percent of U.S. agricultural exports. USDA forecasts fiscal 2023 ag exports to China slightly lower at $34 billion, but will still be the top market. Diversification push: U.S. farmers were caught in the crossfire during the Trump administration, when Beijing retaliated against new U.S. tariffs by imposing duties on U.S. farm goods. That vulnerability shows “we need to be diversifying,” even as we “continue to invest in the Chinese market and the relationship there,” Taylor said. She and McKalip described how the Biden administration was trying to do that through broad initiatives such as the proposed Indo-Pacific Economic Framework, and one-on-one work with individual countries to bring down trade barriers. Record ag trade deficit: USDA also forecast the United States to run a record $14.5 billion agricultural trade deficit in fiscal 2023. Read more about that here. At a panel last week with EU Ag Commissioner Janusz Wojciechowski, Vilsack described how both agricultural leaders must meet demands to boost the exports of their farmer constituents while satisfying trading partners — adding a perennial complication to trade relations. "How do we explain to our producers at home, that by opening up a market to a competitor's product, that somehow someway, that's actually going to be a benefit to them? That's not an easy argument to make to farmers," Vilsack said at the annual Agricultural Outlook Forum
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