VP's visit doesn't resolve US-China trade issues

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By DAVID PITT, Associated Press

DES MOINES, Iowa (AP) — Despite the goodwill expressed with diplomatic gestures, Champagne toasts and speeches on cooperation during Chinese Vice President Xi Jinping's visit to the farm belt this week, the world's two largest economies still have thorny disagreements over agricultural trade to resolve.

Whether it's apples, beef, chicken or strawberries, trade between China and the United States remains complicated. The two are among each other's most important trade partners. U.S. exports to China grew 33 percent from 2009 to 2010 to surpass $100 billion for the first time. At the same time, Chinese exports to the U.S. grew 23 percent to $365 billion.

But both want to sell more. The U.S. has complained about China's import taxes and refusal to buy American beef, while China wants the U.S. to lift its restrictions on chicken now that the bird flu outbreak has ended. It's a sign of agriculture's importance that Xi chose to make it one of the focal points of this week's trip, his first high-level diplomatic visit as the anticipated next president of China.

Bian Zhenhu, president of the China Chamber of Commerce, which oversees imports and exports of food and produce, acknowledged this week that there's much still to be discussed between the two nations.

"We still need to keep mutual respect and mutual beneficial relationships," Bian said while in Iowa. "I hope U.S. officials will be more concerned to help us with our trade here."

China and the U.S. stopped trading in poultry products about eight years ago after the bird flu scare. When the outbreak ended, China relaxed its ban on U.S. poultry imports, but the United States continued to hesitate. At the same time, U.S. trade officials say China has several state-level import bans on poultry and maintains overly restrictive standards for other raw meat and poultry products.

"They have some issues with the United States in getting products into this country, we have some issues with getting products into China," said Michael Scuse, the U.S. Department of Agriculture's acting undersecretary of farm and foreign agricultural services.

U.S. ranchers, meanwhile, have been frustrated by Chinese officials' continued rejection of American beef despite their acknowledgement that there's a growing market for the meat because China's growing middle class want more high-quality protein.

"So many people there want our product, it would be a boon to the entire beef industry," said Bill Donald, a Melville, Mont., rancher and past president of the National Cattlemen's Beef Association.

China stopped buying U.S. beef in 2003, after cases of mad cow disease raised questions about animal health, but the Office of the U.S. Trade Representative noted U.S. beef has officially met international scientific guidelines for more than four years. Donald said about 22 issues, including concerns about mad cow disease, have been cited for the continued ban.

China also restricts fruit and vegetable imports. For example, it limits the import of apples to red and golden delicious, and it's very difficult to get strawberries in, Scuse said.

And yet, the U.S. doesn't want to complain too much. China is a big buyer of grain. Scuse spoke at a Wednesday ceremony in Des Moines where China's promise to buy $4.31 billion worth of U.S. soybeans was announced.

China's also the largest foreign holder of U.S. debt, owning $1.1 trillion at the end of 2011. The U.S. must walk a fine line to preserve its line of credit while continuing to demand open markets and fair trade.

President Barack Obama and Vice President Joe Biden send stern messages this week about China showing more economic responsibility, with Obama saying China must play by "the same rules of the road" as the rest of the world, and Biden warning Xi that cooperation "can only be mutually beneficial if the game is fair."

Xi defended China's policies Thursday at an agricultural symposium in Iowa, saying it has agreed to abide by the World Trade Organization's rules and accept its decisions.

China was accepted in the WTO in 2001 after working for 15 years to get in. To gain membership, it agreed to reduce its tariffs for industrial and agricultural products and limit government subsidies for agricultural products. Both issues have come up occasionally since, however, with the U.S. making complaints to the WTO.

Xi said his country has honored its commitments to the WTO in the past decade and has reduced its agricultural subsidies as promised.

"The Chinese government support level for agriculture is low, and it does not constitute a trade barrier," he said.

Dali L. Yang, a University of Chicago professor who specializes in Chinese politics, said pointing out differences while working to resolve them has been a hallmark of the U.S.-China relationship since Richard Nixon and Henry Kissinger opened communication channels in 1970. But he said Xi's willingness to reach out to critics — including a meeting with top senators in Washington in which John McCain confronted him on human rights — was unusual.

"He stood steadfast, looking out for China's interests but in a way that was not very confrontational," Yang said. "It shows the kind of measured posture that he can stand firm, but also make friends."

Given the overall positive tone of the trade mission, Scuse said it wasn't the time to focus on differences. He plans to lead a trade mission to China in March that will include meetings on trade.

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