Perspectives on US agricultural trade topic of Senate hearing

The Senate Agriculture Committee Sept. 13 held a hearing titled, “Perspectives on U.S. agricultural trade.” The committee heard from Gregg Doud, chief agricultural negotiator in the Office of the United States Trade Representative, and Under Secretary For Trade And Foreign Agricultural Affairs Ted McKinney; USDA Chief Economist Robert Johansson was also in attendance to assist the witnesses and members of the committee needed.

“I hear from producers across the agriculture industry, and across our food value chain, about how trade policies impact their prices, decisions and livelihoods,” said Chairman Pat Roberts, R-KS. “These are not new concerns. The U.S. has long had to work to overcome barriers to trade around the world.

“We need to hold our trading partners accountable, but I am concerned that some of the trade actions we have seen in recent years are causing uncertainty and unpredictability for the agriculture industry.

“On top of already low prices, the agriculture sector has seen immediate negative impacts as a result of retaliatory trade actions. As time goes on without resolution, the concern of losing long-term market access only grows.

“For years, the United States has worked to establish itself as a reliable supplier around the world, through domestic agriculture policies like the farm bill, and through strong international trade policies. Simply put, the entire food and agriculture value chain relies on trade.”

In her opening remarks, Ranking Member Debbie Stabenow, D-MI, said, “As all of us know, our farmers are no stranger to uncertainty. They experience it every day when they check the weather forecast, when they look at the markets and when their crops are challenged by invasive pests or disease.

“On top of all this, there are now many unknowns around agricultural exports and trade. Agricultural exports add over $8.4 billion to the U.S. economy each year, while supporting more than 1 million American jobs on and off the farm. We recognized this in the Senate farm bill by providing permanent, expanded investments for critical trade promotion initiatives that open new markets to American grown agricultural products.”

It is estimated that American dairy farmers alone will take a $1.5 billion hit this year due to tariffs imposed by Mexico and China, Stabenow said.

“To address the impact of the tariffs, the administration has proposed up to $12 billion in emergency aid for some farmers affected,” Stabenow said. “The reaction from many of the farmers I have spoken with is that they want trade not aid. While I look forward to hearing more about the details and methodology behind this package, we must acknowledge that temporary solutions will only go so far.”

Tariffs create concerns for the long-term impacts for agriculture, and that current and future administration actions could result in agriculture permanently losing important trading partners,” Stabenow said.

“I agree that we need strong, meaningful trade enforcement when countries like China break the rules. I also agree that it makes sense to update NAFTA—a lot has changed since its inception in 1994,” Stabenow said. “There is certainly room for improvement in a number of areas, particularly when it comes to dairy and Canada.

“The bottom line is that agriculture should not be an afterthought when it comes to trade. I look forward to hearing from our witnesses on how they are working to ensure our farmers are not left behind.”

Working on a Canada deal

Doud told the committee said the U.S. brought to closure to North American Free Trade Agreement talks with Mexico to fulfill U.S. Trade Promotion Authority requirements.

“We have recently reached an agreement with Mexico that improves on NAFTA in almost every way. On agriculture, it maintains our farmers’ and ranchers’ tariff-free access to the Mexican market and modernizes the agreement in important ways that will cut red tape on our southern border,” Doud said.

“Currently, Ambassador (Robert) Lighthizer and my colleagues at USTR are working to improve our agricultural situation with Canada, particularly in the areas of dairy, poultry, eggs, grain, wine and other products. Completing these negotiations will bring enormous benefits to our farmers, ranchers, food manufacturers and workers.”

The U.S. is using the World Trade Organization to push forward the largest agricultural disputes in history against China for its market price support policies and unfair administration of its tariff rate quotas, Doud said.

“We presented a strong case that China should be held accountable to the same rules as other WTO members, and on that basis we estimate that China has exceeded its de minimis levels of domestic support for rice, wheat and corn by $100 billion. We also estimate that if China had administered its TRQs for rice, wheat and corn according to its WTO commitments (such as transparency and predictability), they would have imported billions more in rice, wheat and corn from all sources.

“Both of these disputes are about China’s failure to follow basic WTO rules. We currently have seven offensive WTO disputes exclusively for U.S. agriculture and six more on retaliatory duties by our trading partners on agriculture and other products.”

Doud also expressed disappointment that U.S. trading partners have decided to retaliate against nearly $30 billion of $143 billion in agricultural exports following necessary actions taken under U.S. trade laws to defend national security or to respond to unfair trade practices.

“I often tell people that the easy issues in agricultural trade were resolved a long time ago. For example, earlier this year USTR and USDA announced market access to Argentina for U.S. pork for the first time since 1992. We also announced poultry access to Morocco even though the Moroccan FTA went into effect in January 2006,” Doud said.

“The United States reached agreement to expand U.S. beef exports to Thailand. The United States and Colombia reached an agreement to expand access and reduce costs for U.S. rough rice exports to Colombia. Under Secretary McKinney and I work closely to coordinate our efforts to expand upon our $143 billion in agricultural exports in 2017.”

Trade victories

McKinney told the committee of the Trump administration scoring what he called “significant government-to-government agricultural trade victories” during 2017, including easing of regulations on U.S. citrus into the E.U.; gaining approval for new biotech varieties in China; resumption of U.S. distillers dried grains into Vietnam and China; reentry of U.S. chipping potatoes into Japan; and the lifting of South Korea’s ban on imports of U.S. poultry.

“This year, the administration continues to prioritize the opening of new markets for U.S. agricultural products. In July, Secretary Perdue celebrated the reintroduction of American pork products to the Argentine market after more than a 25-year hiatus by slicing a 10-pound U.S. honey baked ham,” McKinney said.

“Also in July, USDA announced that Japan has finalized technical requirements that will allow U.S. sheep and goat exports into the country for the first time in more than 14 years. In August, Ambassador Lighthizer and Secretary Perdue announced that the government of Morocco has agreed to allow commercial imports of U.S. poultry meat and products into Morocco for the first time.”

Even with recent trade successes, USDA is constantly looking at the impact of trade on our farmers and ranchers, with a close eye on the impacts from the recent retaliatory tariffs,” McKinney said.

“The president is standing up to China, which wrongly believes it can bully our farmers to get America to back away from defending our economy from unfair trading practices. The president understands that our farmers feed, fuel and clothe this nation and the world, and he will not allow U.S. agriculture to bear the brunt of China’s retaliatory tactics.

“This committee knows well that agricultural exports contribute vitally to prosperity in and beyond rural America. It is my privilege to serve as USDA’s agricultural advocate to the world and help grow these exports.”

Larry Dreiling can be reached at 785-628-1117 or [email protected].