TRADE UPDATE

Food & Agriculture
February 15, 2022

By Michael Anderson, Vice President of Trade and Industry Affairs

HIGHLIGHTS

  • USMCA: The U.S. will pursue USMCA consultations with Mexico for its failure to enforce environmental regulations, which allegedly has led to the near-extinction of the vaquita porpoise. USTR also posted a request for comments on auto trade in conjunction with its review of automotive rules of origin provisions under USMCA.
  • U.S. – China: China’s imports of U.S. goods were significantly below commitments under the Phase One deal, only 57% of the $200 billion over 2017 import levels, according to the Peterson Institute for International Economics (see more details below). Meanwhile, USTR emphasized discussion will continue with China on holding them accountable to commitments under the deal.
  • Trade Balance: The U.S. trade deficit increased to $80.7 billion in December, capping off an overall 27% increase in the 2021 trade deficit, which totaled at an all-time high of $859.1 billion.
  • U.S. – Japan: The U.S. and Japan reached an agreement, eliminating the 25% tariff on Japanese steel products imposed in 2018 under national security concerns outlined in Section 232 of the 1962 Trade Act.
  • Indo-Pacific Economic Framework: The White House announced the U.S. will host the Asia-Pacific Economic Cooperation (APEC) in 2023, facilitating U.S. ambitions in “expanding and deepening economic ties in the region.”
  • WTO : Director-General Ngozi Okonjo-Iweala is reportedly planning the WTO’s 12th ministerial conference for May. Several agenda topics remain points of contention, including pandemic response, organizational integrity, and the TRIPS waiver.

“Even if policymakers agree that multilateral purchase commitments must be part of a long-term solution to China’s trade relationship with the world, they should learn the right lessons from the US experiences under the phase one agreement.”

— Chad Brown, PIIE Senior Fellow

USMCA

The U.S. seeks USMCA consultations over Mexico’s fishing protections

  • The Biden Administration will request USMCA consultations with Mexico for its failure to enforce environmental laws designed to prevent illegal fishing, which allegedly has led to the near-extinction of the vaquita, the most endangered porpoise in the world. A USTR statement specifies that the consultation request “concern[s] Mexico’s USMCA Environment Chapter obligations relating to the protection of the critically endangered vaquita porpoise (Phocoena sinus), the prevention of illegal fishing, and trafficking of totoaba fish (Totoaba macdonaldi).” The vaquita, the world’s most endangered marine mammal, has drawn international attention, USTR said. Most recent estimates show that at least six, but probably fewer than 19, of the porpoises remain.
    • In making the announcement, Ambassador Katherine Tai said, “USTR is committed to protecting the environment and is requesting this consultation to ensure Mexico lives up to its USMCA environment commitments.” “There are serious concerns about Mexico’s enforcement of its environmental laws in compliance with its USMCA obligations related to the protection of endangered species, the prevention of illegal fishing and the trafficking of fish,” Deputy USTR Jayme White told reporters. “It is clear after careful review of the [matter] and evidence we have received that USTR must use the tools in the USMCA to confront these actions and elevate our engagement to protect the environment.” The consultation request is the first-ever under USMCA’s environment chapter, according to the Office of the U.S. Trade Representative.
    • The announcement was praised by House Ways and Means Committee Chairman Richard Neal (D-MA), who said it “demonstrates why Democrats in Congress insisted that the USMCA include enforceable environmental commitments – those provisions allow the USTR to make this kind of request.” Last year conservation groups lobbied the U.S. to pursue consultations with Mexico, claiming the vaquita would be on the verge of extinction within one year unless the U.S. pressured Mexico enforce its USMCA obligations in the environment chapter.

USTR to conduct review of automotive trade under USMCA

  • USTR recently posted a request for comments “concerning the operation of the United States-Mexico-Canada Agreement with respect to trade in automotive goods” in order to review automotive trade between the three countries and further assess U.S. implementation and interpretation of the agreement’s automotive rules of origin. USTR will, in turn, produce a report for congress, presenting “a summary of actions taken by producers to demonstrate compliance with the automotive rules of origin, use of the alternative staging regime, enforcement of such rules of origin, and other relevant matters” and evaluating “whether the automotive rules of origin are effective and relevant in light of new technology and changes in content production processes, and character of automotive goods.”
    • The United States’ interpretation of USMCA’s automotive rules of origin continues to spark debate. Mexico and Canada have formally challenged U.S. application of automotive rules of origin, arguing in calculating regional content of vehicles, U.S. treatment of certain materials or parts from outside the region violates USMCA
    • The USMCA raises the regional content requirement for passenger vehicles to 75% from around 62% under the NAFTA. After a phase-in period that ends in 2023, only vehicles that meet the content requirements will have duty-free access to the United States.
    • Both Canada and Mexico oppose the U.S. interpretation of how to apply the regional value content calculations, claiming USTR’s stricter interpretation is inconsistent with USMCA. They have joined in requesting a dispute settlement panel under the pact.

The U.S. suspends avocado inspections in Michoacán

  • According to the Mexican Ministry of Agriculture, the U.S. has paused avocado inspections in Michoacán, Mexico after an American agriculture inspector received a threatening message this past weekend. Michoacán is Mexico’s highest avocado-producing state and avocado industry workers in the region are a common target of organized crime groups who have historically used threats as a means to gain protection money. Mexico is the United States’ largest provider of avocados, with 2021 imports of Mexican avocados totaling at $2.7 billion. The suspension of avocado trade from the Michoacán region will continue “until further notice.”

U.S. – Canada dairy dispute continues

  • U.S. and Canadian officials continue discussions after a USMCA panel ruled in favor of the U.S. complaint that Canada is breaching its USMCA commitments by reserving most of the in-quota quantity in its dairy tariff-rate quotas (TRQs) for the exclusive use of Canadian processors. Over a month since the panel ruling, the two countries have yet to reach a resolution on the matter. Earlier, the Canadian government confirmed they have sent a proposal in an attempt to reconcile the dispute but refrained from commenting on the contents. If an agreement between the U.S. and Canada fails to come into fruition, the U.S. has the right to retaliate under the USMCA.

China Trade

Mitch McConnell
Senator Mitch McConnell (R-KY)

America COMPETES Act receives criticism from republican leadership

  • Commenting on the House’s anti-China bill, Senate Minority Leader Mitch McConnell (R-KY) called the America COMPETES Act a partisan bill compared to USICA. “A few days ago, instead of passing the Senate’s careful compromise, House Democrats slapped together a partisan bill stuffed with poison pills and the kinds of things they tried to put in their reckless taxing and spending spree that failed at the end of last year,” said the Senator. Minority Leader McConnell went on to note House Democrats “didn’t even bother to try working with House Republicans.”
  • Members of the U.S. House of Representatives passed the America COMPETES Act, by a vote of 222-210. The bill, which was created as a counter to the Senate’s Innovation and Competition Act (USICA), aims to enhance American competitiveness in the face of anti-competitive Chinese action. By the means of investing in semiconductor chips, supporting supply chains and manufacturing, conducting scientific research, and enforcing targeted anti-China measures, the America COMPETES Act seeks to strengthen U.S. businesses and the U.S. economy.
  • 220 amendments to the America COMPETES Act were approved along with the bill. Such amendments include numerous tweaks to the Creating Helpful Incentives to Produce Semiconductors in America Act (CHIPS Act) as well as the addition of the Ocean Shipping Reform Act.
  • The bill also contains provisions relating to China that address U.S. policy on World Bank Group and Asian Development Bank loans to China, Chinese support for Afghan illicit finance, China financial threat mitigation, and U.S. policy on multilateral development bank co-financing arrangements with China’s infrastructure bank, among other concerns.
  • Ambassador Tai lauded the passage of the America COMPETES Act in the House stating, “Our trade policy will benefit from strong and resilient supply chains, which is exactly what the America COMPETES Act will provide.”

Phase One Agreement

China falls significantly short of Phase One Purchase Commitments

  • As expected, final trade data for 2020-2022 reveals China’s imports of U.S. goods were significantly below commitments under the Phase One deal. Signed in January 2020, China agreed to increase its purchases of U.S. goods and services by $200 billion over 2017 levels during the two-year period, with specific targets set for manufactured goods, agriculture products, services and energy. China’s purchase were only 57% percent of the level outlined in the Phase One agreement, according to analysis by the Peterson Institute for International Economics (see more details below). 
    • In response to the release of full year 2021 trade data, USTR said conversations with China about its performance under the deal are still ongoing. China “made clear commitments and they should live up to them,” Adam Hodge, a spokesman for USTR said. He noted the Biden Administration still has “fundamental concerns [with China’s] nonmarket trade policies and practices and their harmful impacts on the U.S. economy,” several of which weren’t covered in the Phase One deal.
    • Chinese officials responded saying that China’s purchases of U.S. goods were hindered by the economic downturn triggered by the Covid-19 pandemic in 2020. “China has worked hard to overcome the multiple negative impacts of the pandemic, global economic recession and disrupted supply chains, and promoted the joint implementation of the agreement,” spokesman Liu Pengyu said.
    • For several months, Biden Administration officials have signaled China’s shortfall in purchase commitments and said the administration expected “concrete action” from China to fulfill its commitment to purchase $200 billion in additional U.S. goods and services. USTR officials have consistently reported they are exploring all tools available to hold China accountable yet have not specified any definite actions.

China only reached 57% of purchase commitments

  • According to a Peterson Institute for International Economics (PIIE) report, China fell significantly short of the “$200 billion of exports” they committed to as a supplement to the Phase One agreement and was “never on pace to meet its purchase commitments.” “In the end, China bought only 57 percent of the US exports it had committed to purchase under the agreement, not even enough to reach its import levels from before the trade war,” said Chad Brown, Senior Fellow at PIIE.  According to the report:
    • China promised to buy “at least $227.9 billion of US exports in 2020 and $274.5 billion in 2021, for a total of $502.4 billion over the two years,” but ultimately only successfully purchased $288.8 billion in U.S good and services.
  • Agriculture exports, despite recovering from the trade war, only reached 83 percent of their Phase One commitments.
  • Soybeans, the largest U.S. agriculture export to China, “fell over 30 percent short of their target.” Cotton, Lobster, Raw hides and skins, among other agricultural products also fell short of their purchase commitments
  • On the other hand, “Products like pork, corn, wheat, and sorghum exceeded expectations,” although they were unable to offset the purchasing deficits of other agricultural goods.

COVID-19

The U.S. trade deficit hit an all-time high

  • The U.S. trade deficit increased 27% last year to an all-time high of $859.1 billion. The measure of overall trade (goods and services) in 2021 surged past the previous record of $763.53 billion in 2006. The Commerce Department reported the trade deficit increased to $80.7 billion in December from $79.3 billion in November (revised), as imports increased more than exports.
  • December exports were $228.1 billion, $3.4 billion more than November exports. December imports were $308.9 billion, $4.8 billion more than November imports. The December increase in the goods and services deficit reflected an increase in the goods deficit of $3.2 billion to $101.4 billion and an increase in the services surplus of $1.8 billion to $20.7 billion. For 2021, the goods and services deficit increased $182.4 billion, or 27 percent, from 2020. Exports increased $394.1 billion or 18.5 percent. Imports increased $576.5 billion or 20.5 percent.

Supply Chains

Port Envoy calls ocean carriers’ treatment of ag exports “unacceptable”

  • John Porcari, Port Envoy to the Biden-Harris Administration Supply Chain Disruption Task Force, gave comment on the current supply chain bottlenecks, harming American agriculture. According to Politico, Porcari professed, “We don’t think the ocean carriers are treating agricultural exports the way they should.” He went on to stress, “if their emphasis is on getting empty containers back to point of origin, as opposed to helping U.S. exports, that’s unacceptable.” The Biden Administration has made tackling supply chain issues and enhancing waterway infrastructure a point of critical importance to their legislative agenda. Porcari, along with other administration actors, have specifically underlined the necessity of aiding the agricultural sector in pursuing supply chain solutions. “We want to make sure that no part of the agricultural economy in the U.S. is disadvantaged by these short-term dislocations when they spent years building their markets,” said Porcari.

Other

Record agricultural exports recorded in 2021

  • The U.S.’ agricultural exports surged in 2021, recording its highest annual export levels of all time. A USDA press release provided more details on the 2021 trade data, announcing, “exports of U.S. farm and food products to the world totaled $177 billion, topping the 2020 total by 18 percent and eclipsing the previous record, set in 2014, by 14.6 percent.”
    • Numerous agricultural export records were broken in 2021 with all of the U.S.’ top 10 markets reporting gains and “six of the 10 – China, Mexico, Canada, South Korea, the Philippines and Colombia – setting new records.”
    • According to the USDA, “China remained the top export destination, with a record $33 billion in purchases, up 25 percent from 2020, while Mexico inched ahead of Canada to capture the number two position with a record $25.5 billion, up 39 percent from last year.”
    • “This is a major boost for the economy as a whole, and particularly for our rural communities, with agricultural exports stimulating local economic activity, helping maintain our competitive edge globally, supporting producers’ bottom lines, and supporting more than 1.3 million jobs on the farm and in related industries such as food processing and transportation,” exclaimed Secretary of Agriculture Vilsack. The Secretary went on to commend U.S. agriculture producers and the Biden Administration for their work in realizing this monumental achievement.
Image from USDA

Section 232 Investigations

New U.S – Japan steel agreement

  • The U.S. and Japan have reached an agreement, eliminating the Trump-era 25 percent tariff on Japanese steel products under Section 232. Starting April 1st of this year, the U.S. will implement a tariff rate quota (TRQ) system for Japanese steel imports. The deal permits “historically-based sustainable volumes of Japanese steel products to enter the U.S. market without the application of Section 232 tariffs” while calling on Japan to “implement appropriate domestic measures, such as antidumping, countervailing duty, and safeguard measures” to address issues related to non-market excess capacity.
    • In a joint statement announcing the new trade arrangement, the U.S. and Japan agreed “to expand U.S./Japan coordination involving both trade remedies and customs matters,” monitor and review steel and aluminum trade between the two parties, and continue discussions on carbon intensity.
    • Commenting on the new deal, Ambassador Tai noted, “this agreement represents an important example of our worker-centered trade policy in action. It will protect a vital American industry, our workers, and their families as we work to deliver trade policies that can unlock broad-based economic prosperity and growth.”
    • The tariff-rate quota taking effect April 1st allows as much as 1.25 million metric tons of steel to enter the U.S. duty-free each year, with imports above that threshold facing the current 25 percent tax. That’s more than the 1.1 million tons the U.S. imported from Japan in 2019, though less than the 1.7 million from 2017, the last year before the tariffs.

Senators push for GOES trade negotiations

  • U.S. Senators Rob Portman (R-OH), Sherrod Brown (D-OH), and Robert P. Casey Jr. (D-PA) appealed to the Biden Administration to take steps in boosting and protecting American production of grain-oriented electrical steel (GOES). In a letter addressed to Secretary Raimondo and Ambassador Tai, the senators referenced a Section 232 investigation that found “in 2019 over 95 percent of imported down-stream GOES products came from Canada and Mexico, yet neither country has actual GOES production,” emphasizing the U.S.’ “two biggest trading partners are importing GOES from abroad rather than the United States.” According to the senators, the current conditions of GOES products trade threaten national security and require immediate action. As a first step the senators urge the administration to “negotiate with Canada and Mexico to either reduce their exports of down-stream GOES products to the United States, or utilize more U.S. GOES in the production of those products.” At this time, no action has been taken to address the findings of the Department of Commerce Section 232 investigation mentioned above.

US – U.K. tariff talks continue

  • Talks continue between U.S. and U.K. officials on global steel and aluminum overcapacity to find a mutual resolution for Section 232 disputes. Secretary of Commerce Raimondo, Ambassador Tai, and U.K. Secretary of State for International Trade Trevelyan met virtually recently, discussing U.S. Section 232 tariffs on U.K. imports and U.K. retaliatory tariffs on U.S. exports to the U.K. “They agreed that, as the United States and the United Kingdom are close and long-standing partners, sharing similar national security interests as democratic market economies, they can partner to promote high standards, address shared concerns and hold countries that practice harmful market-distorting policies to account,” according to a U.S.-U.K. joint statement on the issue.
  • A coalition of over 75 U.S. and U.K. organizations sent a letter to U.S. and U.K. officials, urging them to reach an agreement to remove retaliatory tariffs, and emphasizing the threat of tariffs on products unrelated to the Section 232 dispute (agriculture and other non-steel and aluminum products). The letter noted that, “Since June 2018, suppliers and supply chains wholly unrelated to the steel and aluminum dispute have suffered from the imposition or threat of tariffs. It is imperative these tariffs are removed so our sectors have the ability to recover from the harsh economic impacts and significant supply chain disruptions caused by the pandemic. Tariffs and the threat of additional tariffs are major barriers at a time when we should be focusing on recovering from the pandemic, creating jobs, promoting growth and investments in both the UK and the U.S.”

Section 301 Investigations

Senators encourage USTR to expand the Section 301 exclusion process

  • In a letter addressed to USTR Ambassador Tai, a group of 41 bipartisan senators wrote “to express [their] strong support for establishing a comprehensive exclusion process for U.S. manufacturers, producers, and importers to request relief from tariffs placed on products from China pursuant to Section 301 of the Trade Act of 1974.” The senators go on to state their concern that the most recent modifications to the Section 301 exclusion process, announced in October of 2021, are too “narrow,” highlighting “only one percent of imports under the original exclusion process are eligible for consideration.” The bipartisan letter adds to the growing list of pleas made to USTR in hopes of expanding the exclusion process. Lawmakers who have signed onto these appeals “believe that restarting a full exclusion process can allow the United States to continue to maintain pressure on China, while providing relief to the economic pain facing businesses and workers across the country.”
  • report released last summer by the Government Accountability Office (GAO) said that from 2018 to 2020, U.S. stakeholders submitted about 53,000 exclusion requests to USTR for specific products covered by the tariffs. GAO found that USTR rejected 87 percent of the approximately 53,000 tariff exclusion requests it received when Trump was president.

Biden Transition

USTR names Ginna Lance interim Chief of Staff

  • USTR has chosen an interim Chief of Staff.  Ginna Lance, who has served as Deputy Chief of Staff for the past year, will take the place of Nora Todd, who joined the staff of National Security Adviser Jake Sullivan. In the meantime, USTR will continue the search for a permanent Chief of Staff.
Reta Jo Lewis, President, Export-Import Bank

Senate confirms Reta Jo Lewis as Ex-Im Bank president

  • The Senate confirmed Reta Jo Lewis (56-40) as the new President and Chair of Export-Import Bank of the United States. Ms. Lewis currently serves as Senior Fellow and Director of Congressional Affairs at the German Marshall Fund of the United States (GMF). Commenting on Lewis’ confirmation, Senator Sherrod Brown (D-OH) noted, “China’s export finance activity is larger than all of the export credit provided by the G7 countries combined. We know the Chinese government uses export credit as a weapon to win manufacturing business in critical sectors and undermine American companies and American workers… It’s why we need every tool possible to compete – including a fully-functioning Export-Import Bank, with an experienced, tenacious leader at the helm.” Ms. Lewis will be the first Black woman to lead the bank. 

Other nominations still stalled

  • No significant updates since Secretary Vilsack noted the Biden Administration is vetting an unnamed person for the USDA’s Under Secretary for Trade position.  Vilsack emphasized the complexity of the process, stating the vetting process has been underway “for a considerable period of time,” owing to a “very complex set of business relations” of the person and they’re currently working through potential “ethics problems” with the person’s financial investments.
  • Separately, Elaine Trevino, Biden’s nominee for the Chief Agriculture Negotiator role at USTR awaits scheduling of a Senate Finance confirmation hearing.  Additionally, the nominations of María Pagán and Christopher Wilson, for Deputy USTR roles, are presently blocked at the Senate Finance Committee by Senator Mike Lee (R-UT) over concerns with the Biden Administration’s position on an IP waiver at the WTO regarding COVID vaccines.

U.S. – Brazil

U.S.-Brazil CEO Forum Releases Recommendations Report

  • This week, “Department of Commerce Deputy Secretary Don Graves, National Economic Council (NEC) Director Brian Deese, and Under Secretary of Commerce for International Trade Marisa Lago met virtually with the U.S. section of the U.S.-Brazil CEO Forum to discuss opportunities to increase bilateral trade and investment with Brazil across industry sectors,” according to a Department of Commerce press release. In an effort to promote cooperation and mutually beneficial policy action, the U.S.-Brazil CEO Forum shared a Recommendation Report at the meeting. The content of the Recommendation Report calls on American and Brazilian leadership to “finalize implementation and recognition of U.S.-Brazil Trade Protocol,” “increase supply chain agility and resiliency,” foster “trade facilitation,” “implement foundational, cross-sectoral good regulatory practice,” and promote a “circular economy.”

Indo- Pacific Economic Framework

U.S. named 2023 APEC host

  • The White House announced, “the United States will be the host of the Asia-Pacific Economic Cooperation (APEC) in 2023,” attesting that the U.S.’ approval for the role underscores American “commitment to advance fair and open trade and investment, bolster American competitiveness, and ensure a free and open Indo-Pacific.” The Biden Administration attributed its desire to host APEC 2023 to its “focus on expanding and deepening economic ties in the region.” The White House press release went on to reference the IPEF, stating, “Secretary of Commerce Raimondo, United States Trade Representative Ambassador Tai, and our team are working to develop with our partners an Indo-Pacific economic framework that will define our shared objectives around issues vital to our future.” No further details were provided.
Map of APEC members, Image from apec.org

Indo-Pacific countries eager for deep U.S. engagement

  • The White House confirmed several Asian countries are keen to see U.S. engagement in the region through the Indo-Pacific Economic Framework (IPEF) but noted not all aspirations may be achievable. “We recognize that countries want to see more,” a senior administration official told reporters, but cautioned that the IPEF will focus on several priority issues not covered by past trade deals, such as supply chains. The official continued, “We think that there is demand for quite a few of these elements,” “And I think that our  partners are very realistic about the constraints and challenges in which we operate and the president’s views on this.”
  • Recently Deputy USTR Sarah Bianchi confirmed the U.S. will “be seeking binding commitments with our trading partners, whether it’s in digital area, labor or environment,” under IPEF. She acknowledged the IPEF won’t involve new market access commitments but will involve “high-standard rules to increase interoperability [and] competitiveness among the parties to the arrangement.” Bianchi has said more details on IPEF will be unveiled in the “coming weeks.”

U.S. – EU

U.S. and EU to resume bivalve shellfish trade

  • As reported earlier, the U.S. and EU have agreed to resume trade in bivalve shellfish. This includes oysters, clams, mussels, and scallops. At this time, producers from Massachusetts and Washington on the U.S.-side and Spain and the Netherlands on the EU-side are eligible to begin exporting.
    • It has been over 10 years since bilateral bivalve molluscan shellfish trade between the EU and U.S., which was previously halted due to food safety concerns, has been permitted.
    • The European Union’s Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade, commented on the achievement, “I warmly welcome this deal, which resolves a long-standing issue we have been working hard to unlock. It shows that our efforts to forge a positive, forward-looking trade agenda with the United States are paying off.”
    • USTR has characterized the agreement as a major feat for U.S. seafood trade, noting “In 2020, the United States was one of the world’s largest seafood exporters, with global sales of seafood products valued at $4.5 billion. 2021 exports of U.S. seafood products to the EU exceeded $900 million.”

U.S. – U.K. Trade

U.S.-U.K. trade talks still “on pause”

  • During a National Asian Pacific American Bar Association (NAPABA) event, Ambassador Katherine Tai stated the U.S.-U.K. and U.S.-Kenya trade talks, that commenced under the Trump Administration, are still “on pause.”
    • Ambassador Tai did, however, affirm USTR is very keen on “enhancing our trade relationships and our collaboration with our partners in the U.K. and Kenya.” How the U.S. plans on going about trade-related conversations with the U.K. and Kenya remains unclear.
    • Ambassador Tai went on to say, “in terms of what form [British and Kenyan collaboration] will take and whether it conforms to exercises and vehicles that are familiar to us, I’m going to leave that open, but our focus really is on how to be most effective and being good partners in advancing ourselves into a really strong economic recovery by working together.”
  • Meanwhile U.K. officials are posturing for trade negotiations with the Biden Administration to commence after the U.S. midterm elections later this year. “We hope that may be after the midterms, when they want to pick up and talk about those federal-level bits of an FTA, we stand ready to carry on those conversations,” Secretary of State for International Trade Anne-Marie Trevelyan said recently. In the interim, U.K. officials U.K. are focusing on state-level negotiations, laying the regulatory groundwork for a future bilateral trade agreement. The U.K. has already secured new trade agreements with New Zealand and Australia, launched negotiations with India, and requested entry into the CPTPP.

WTO

MC 12 rumored to be held in May

  • Recent reports suggest WTO Director-General Ngozi Okonjo-Iweala intends to reconvene the organization’s 12th ministerial in May. Although official sources have not confirmed a new MC 12 date, more information is expected to be released at the WTO’s next General Council meeting later this month. Much uncertainty about the productiveness of the next ministerial remains among WTO members as a number of contentious issues have yet to be resolved by the group. Conversations on pandemic response measures, WTO reform, and the TRIPS waiver continue to spark debate.

Environmental trade work plan yields broad support

  • WTO members met recently to discuss trade and environmental sustainability. Their talks were focused on the review of group’s Trade and Environmental Sustainability Structured Discussions (TESSD) work plan, which was originally released in December of 2021. Major points of conversation of the initiative include “trade-related climate measures,” “facilitating trade in environmental goods and services,” “achieving a more resource-efficient circular economy,” “promoting sustainable supply chains and addressing challenges and opportunities arising from the use of sustainability standards,” “challenges and opportunities for sustainable trade,” and “environmental effects and trade impacts of relevant subsidies.” The trade and environmental sustainability talks have been largely successful so far as “delegations expressed broad support for the draft work plan.” Three more TESSD meeting will be held this year.

Six countries join the EU’s WTO case against China

  • The EU gained three new supporters on its WTO dispute complaint regarding Chinese restrictions on trade with Lithuania. Taiwan, Canada, and Japan now join the U.S., UK, and Australia on the EU case, claiming China has hindered trade with Lithuania after it announced it will establish a Taiwanese Representative Office in its capital. Dispute tensions continue to grow as China suspends more imports from Lithuania. Most recently, China has blocked Lithuanian beef, alcohol, and dairy products. Taiwan, Canada, and Japan have not yet released public statements on joining the case.

Pandemic response conversation paused

  • Discussions on the WTO’s pandemic response remain on “strategic pause,” according to General Council Chair Ambassador Dacio Castillo (Honduras) due to deep divides among member countries on several key issues. Castillo said that “it was evident that delegations needed more time to engage with each other first, in different configurations to work through these differing perspectives, before reverting to the Representative Group discussions.” “In other words, a strategic pause is needed at the point. This is precisely why I proposed the use of a cocktail approach – to enable us to quickly adapt,” he continued. Castillo urged members to “bridge different perspectives to move everyone in one direction. I am only here to assist you in your endeavor.”

Ag Economy Barometer

The Ag Economy Barometer retreats on rising input costs and supply chain disruptions

  • The January Ag Economy Barometer retreated 6 points to 119, giving back most of December’s increase.  January’s index of 119 is the second lowest reading since July 2020 when the economic ravages of COVID-19 pervaded the agriculture sector. The 6-point decline in the barometer was driven principally by continuing concerns with rising input costs with over one-third of respondents indicating they expect input prices to rise by 30% or more in 2022. Supply chain issues also weighed heavily on famer sentiment as over 25% of producers reported experiencing difficulty in farming inputs such as herbicides, insecticides, fertilizer, and farm machinery parts.