Trade deal: Where’s the beef?

As the advert says, it’s good to talk. Especially when the alternative is a new cold war. Reports this week that the United States and China have signed a new ‘‘Phase 1’’ trade deal will have warmed the hearts of trading nations and industries around the world worried about the ongoing dialogue between the two greatest economies.

The Dow Jones and other financial markets jumped at the news but later cooled somewhat as business leaders and experts looked deeper into this early new year present.

US President Donald Trump portrayed the deal as a ‘‘momentous step forward’’. Certainly, the world will be pleased to see the economic protagonists finally at the same table after close to two years of bickering, and also give due recognition to their roles in avoiding ongoing enmity.

But many commentators have questioned both the timing of the signing and the depth of the document’s detail. It cannot be ignored that any positive developments, meaningful or manufactured, will be a welcome diversion in the US, mired as it is in the drama of impeachment. And barely 10 months before an election in which Trump is likely to hail his economic prowess.

Similarly inescapable was the chasm between Trump’s enthusiastic description and how China signalled the signing. Presidents normally prefer their counterparts to attend such grand signings, but Xi Jinping was absent, leaving his top trade negotiator to wield the pen.

Even Scott Paul, president of the Alliance for American Manufacturing, appeared nonplussed.

‘‘My take on Phase 1 is that it largely restores the status quo,’’ he said. He was even less enthusiastic about the prospect of Trump building on this initial success. ‘‘I’m not optimistic that we’ll get a Phase 2 deal that’s going to dramatically alter the landscape.’’

Others have pointed out that China has merely formally signed up to commitments already made and others in the works.

The biggest winner is likely to be America’s agricultural sector. China has agreed to buy an extra US$200 billion of US products over the next two years, with the Chinese receiving reduced tariffs on some of their exports. That appears to undermine the country that exports the most food to China: New Zealand.

If that sounds bad, there is at least one silver living: most of the food we export to China comes from our dairy farms. And much of that is milk powder – 700,000 tonnes of whole milk and 155,000t of skim milk powder annually – which the Americans either can’t produce or not in sufficient quality.

They don’t do lambs either, which leaves beef meat as the industry at the greatest risk, and American beef is grain-fed while New Zealand’s is grass-fed. Even there, any advantage to the US – still many years away, according to commentators – will likely be nullified somewhat by the continued growth of a prosperous Chinese middle class and a genuine domestic market.

All of this means that, while we may not want to party like Trump, and full impacts are yet to be realised and understood, this is still a positive step in a new, uncertain decade.

The biggest winner is likely to be the US agricultural sector.