TRADE UPDATE

Food & Agriculture
February 22, 2022

By Michael Anderson, Vice President of Trade and Industry Affairs

HIGHLIGHTS

  • USMCA: U.S. inspections of Mexican avocados will resume after officials in both countries agreed to implement enhanced safety measures and procedures for inspectors. Additionally, Canada prevailed in the USMCA solar panel dispute and said it will work with U.S. to remove the “unjustified tariffs” imposed by the prior administration.
  • U.S. – China: USTR said in its annual report to Congress that China has backed away from free trade principles and full adherence to WTO trade rules. The USTR report emphasized “new trade tools” are imperative to address the China challenge.
  • U.S. – Ecuador: U.S. and Ecuadorian trade officials convened the fourth Trade and Investment Council meeting, discussing improvements to Ecuador’s agriculture import licensing system, the eradication of child labor and climate change mitigation.
  • Indo-Pacific Economic Framework: Leaders of the Senate Foreign Relations Committee expressed support for the administration’s new Indo-Pacific strategy as a tool to compete in the region with China. Australia welcomed further details on the Indo-Pacific Economic framework and willingness to work with the Biden administration.
  • WTO : WTO members are considering reconvening the 12th ministerial in early June. Separately, WTO Director-General Okonjo-Iweala said climate-related trade policy is a key agenda priority for the WTO.

“China’s leadership appears confident in its state-led, non-market approach to the economy and trade and feels no need to conform to global norms.”

— USTR’s “2021 Report to Congress on China’s WTO Compliance”

USMCA

Canada wins U.S.-Canada solar tariffs dispute

  • Canadian Minister of International Trade Mary Ng released a statement, announcing a USMCA dispute panel found U.S. tariffs on Canadian solar products in violation of the trade agreement. “We welcome the United States’ intention to pursue a resolution with Canada and Mexico, as indicated by the President in his recent announcement. It has been made clear today in the CUSMA dispute settlement panel’s report that tariffs on Canadian solar products are in violation of CUSMA. Canada will work toward the complete removal of these unjustified tariffs,” said Minister Ng.
    • According to a backgrounder published by the Canadian government “The administration of former U.S. president Donald Trump failed to exclude Canada from the solar safeguard measure in 2018 when it imposed these tariffs on imports of solar cells, modules, and panels from all sources. This failure to exclude Canada occurred despite the explicit ruling by the United States International Trade Commission that imports from Canada did not meet the standard for inclusion under article 802.1 of NAFTA.”
    • The Section 201 global safeguard tariffs have since led to an 82% decrease in U.S. imports of Canadian solar products.
    • Following the dispute panel decision, the U.S. has “45 days to reach an agreement with Canada.”
Mary Ng tweet on solar products

USDA restarts avocado inspections

  • The USDA reported working with Mexican government and industry officials to renew avocado safety inspection after implementing “additional measures that enhance safety for APHIS’ inspectors working in the field.” “The safety of USDA employees simply doing their jobs is of paramount importance,” USDA said in a statement. “USDA is appreciative of the positive, collaborative relationship between the United States and Mexico that made resolution of this issue possible in a timely manner.”
  • The International Fresh Produce Association praised the outcome stating, “IFPA looks forward to continuing to work with businesses on both sides of the border and their respective governments to continue to monitor and address these issues, so consumers can continue to enjoy uninterrupted access to fresh produce.”
    • Earlier, Mexican President Lopez Obrador called the avocado ban “political.” “In all of this there are also a lot of political interests” and “there is competition,” he said at a news conference. He went on to explain, “they don’t want Mexican avocados to get into the United States, right, because it would rule in the United States because of its quality.”
    • Two weeks ago the U.S. had paused avocado inspections in Michoacán, Mexico after an American agriculture inspector received a threatening message. 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.

China Trade

USTR alleges China is backing away from free-trade commitments

  • USTR said China has backed away from free trade principles and full adherence to WTO trade rules. “China has not moved to embrace the market-oriented principles on which the WTO and its rules are based, despite the representations that it made when it joined 20 years ago,” said Ambassador Katherine Tai. “China has instead retained and expanded its state-led, non-market approach to the economy and trade. It is clear that in pursuing that approach, China’s policies and practices challenge the premise of the WTO’s rules and cause serious harm to workers and businesses around the world, particularly in industries targeted by China’s industrial plans,” she continued. The comments were made in conjunction with the Office of the USTR’s annual report to Congress on China’s WTO compliance. 

USTR Releases Report on China’s WTO Compliance

  • China’s WTO membership is shrouded by critique, which argues the nation’s state-led economic practices threaten the core purpose and values of the WTO. The United States and China’s trade relationship has also become a point of growing criticism and subsequent assessment, especially with the release of U.S.-China 2021 export/import data. As part of the U.S. governmental review of China’s non-market approach, USTR released its annual report on China’s WTO compliance. The annual report attests, “After 20 years of WTO membership, China still embraces a state-led, non-market approach to the economy and trade, despite other WTO members’ expectations – and China’s own representations – that China would transform its economy and pursue the open, market-oriented policies endorsed by the WTO.”
    • USTR devoted a portion of its report to agricultural trade, finding that “China remains a difficult and unpredictable market for U.S. agricultural exporters, largely because of inconsistent enforcement of regulations and selective intervention in the market by China’s regulatory authorities.” The report goes on to note that although “China’s implementation of the agricultural commitments in the Phase One Agreement has been generally positive,” the country failed to implement meaningful action regarding agricultural biotechnology and production risk assessment.
    • In an effort to address China’s non-market economic practices, “the Biden Administration is pursuing a multi-faceted approach… through both bilateral engagement with China and the use of trade tools to protect American workers and businesses.” Furthermore, “the Administration’s strategy also includes enhanced engagement with allies and partners in order to build broad support for solutions to the many unique problems posed by China and defending our shared interests.”
    • The annual report is required under section 421 of the U.S.-China Relations Act of 2000 (P.L. 106-286), 22 U.S.C. § 6951 (the Act), in which USTR must report China’s compliance   with commitments made in connection with its accession to the WTO, including both multilateral commitments and any bilateral commitments made to the United States.  

China updates Decree 248

  • The General Administration of Customs of the People’s Republic of China (GACC) “updated the list of products whose production facilities are required to register under Decree 248.” According to the USDA, “GACC shortened the list but added several hundred commodity categories – notably in seafood and frozen fruit.”  USDA encourages exporters to “pay special attention to the addition of several kinds of frozen fruit, as well as preserved cranberries, and frozen potatoes and potato products.”
    • Decree 248 requires “all overseas food manufacturers, processors, and storage facilities to be registered with the GACC to import product into China. The new requirements cover all food products except for food additives and “food-related products,” which are defined by the Food Safety Law of China to include food packaging materials, detergents, disinfectants, and tools and equipment used in food manufacturing. Also notably, Decree 248 requires the registration number be provided on the inner and outer packaging of the foods exported to China,” stated a Global Cold Chain Alliance factsheet on the legislation.

America COMPETES Act’s trade provisions receive support from democrats

  • In a letter addressed to Speaker of the House Nancy Pelosi and Senate Majority Leader Schumer, five democratic senators wrote to confirm their “strong support for the trade proposals in COMPETES.” While acknowledging the strengths of the Senate’s USICA, the senators ultimately settled on the COMETES act as the better of the two anti-China bills in terms of trade. “The COMPETES Act trade title is directly focused on tackling competitiveness issues related to trade with China, including funding for adjustment assistance for workers, environmental safeguards against chronic pollution from foreign production and bipartisan proposals addressing trade enforcement and security issue,” stated the senators.
  • On the other side of the spectrum, 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.

Phase One Agreement

USTR says new tools needed

  • USTR reiterated China’s shortfall in meeting its commitments under the Phase One deal in the agency’s annual report to Congress on China’s WTO compliance.  “China has also fallen far short of implementing its commitments to purchase U.S. goods and services in 2020 and 2021,” USTR noted, referencing the $200 billion additional imports, over 2017 levels, of U.S. agriculture, energy, manufactured goods, and services prescribed in the Phase One agreement. USTR emphasized the Phase One deal “did not meaningfully address the more fundamental concerns that the U.S. has with China’s state-led, non-market policies and practices and their harmful impact on the U.S. economy and U.S. workers and businesses.”
  • Consequently, USTR said it was embarking on a multi-faceted approach and new trade tools are needed in dealing with the China challenge. “It is clear that domestic trade tools — including updated or new domestic trade tools reflecting today’s realities — will be necessary to secure a more level playing field for U.S. workers and businesses. The United States therefore is exploring how best to use and improve domestic trade tools to achieve that end,” the report said.  The report further noted additional actions include working with the EU through the new U.S.-EU Trade and Technology Council (TTC) and forging an Indo-Pacific Economic Framework with like-minded countries in the region.

House republicans express concern over agricultural trade relationship with China

  • Sixty House republicans wrote a letter to President Biden, urging the administration “to make the U.S.-China agricultural trade relationship more balanced and reciprocal.” The representatives cited China’s failure to fulfill its agricultural purchase promises under Phase One, noting China came roughly $16 billion short of its $73.9 billion commitment. “We are concerned that China has not lived up to its Phase One commitments, and that your administration has not sufficiently reported to Congress on China’s compliance, brought forward enforcement actions on China shortcomings, nor sought to negotiate new commitments from China, including on agriculture,” the letter stated. The congressmen and women argued “the U.S. should fully enforce the agreement and receive damages from China for China’s failure to perform.” Additionally, the United States should seek to establish a new trade agreement with China and other countries “that can expand U.S. agricultural market access abroad.”
    • Accompanying the letter, the representatives also presented President Biden with a series of questions, inquiring, how the administration will address the Phase One situation, how the administration intends move forward with new trade deals with China, and when the administration intends to make a final nomination for the U.S. Department of Agriculture Under Secretary for Trade and Foreign Agricultural Affairs position.

COVID-19

International trade forecast to slow in 2022

  • Global trade in goods and services this year is expected to slow, following a torrid pace in 2021 according to a United Nations report. Contributing to the slowing rate of trade are inflation pressures in the U.S. and real-estate instability in China, the world’s two largest economies. The report, produced by the United Nations Conference on Trade and Development (UNCTAD), reported international trade reached a record of $28.5 trillion in 2021, a 25% jump over 2020, and was 13% higher than the total in 2019.
global trade in goods and services is expected to slow in 2022

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.
US trade deficit at $859.13 billion

Record import prices contribute to trade imbalance

  • The U.S. Bureau of Labor Statistics (BLS) reported the largest increase in U.S. import prices in over 10 years this January. “Prices for U.S. imports advanced 2.0 percent in January following a 0.4-percent drop in December,” related the BL. “Higher fuel and nonfuel prices in January contributed to the overall increase in import prices.”
  • The price of exports also increased 2.9 percent in January with U.S. agriculture export price increasing 3.0 percent. “Higher prices in January for soybeans, other animal feeds, corn, vegetables, and cotton all contributed to the advance in export agricultural prices. Prices for agricultural exports rose 18.0 percent over the past 12 months.”

Agriculture Exports

Pork exports expected to boom in 2022

  • Brett Stuart, co-founder of the Global AgriTrends consulting company, said 2022 will be another good year for U.S. pork exports, according to an Agri-Pulse report. Stuart claims pork will see an upward trendline in exports this year, largely due to Chinese demand. Despite Chinese imports of U.S. pork kicking off 2022 at the low level of 50 million pounds in January, Stuart estimates China will be importing 200 million pounds of pork per month by the end of the year.
    • In Stuart’s conversation with Agri-Pulse, he noted right now “prices are still weak and there’s plenty of pork (in China), but the Chinese farmers don’t have access to capital.” Moreover, the farmers “can’t get loans to feed hogs if they’re losing money. If they’re losing money, they have to sell something … and usually, they’re selling sows. At some point, they’re going to liquidate too far and that’s what’s going to drive prices back up in 2022 and lead to an increase in imports.”
    • Stuart also referenced elevated Latin and South American purchasing of American pork as a contributing factor to another good year for U.S. pork exports. Mexican pork imports went up 27% in 2021 and are expected to remain high. Likewise, speaking about the rest of Latin and South America, Stuart said, “They have a combined population of 128 million people. Mexico has 130 million. What we have south of Mexico is another Mexico. We may hit $1 billion (in pork exports) to this group by 2022.”
Graph from U.S. Meat Export Federation

Section 232 Investigations

U.S – Japan steel agreement

  • Further details on the U.S. and Japan agreement, eliminating the 25-percent tariff on Japanese steel products under Section 232 are available. 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.  
    • 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.
    • Imports of Japanese aluminum products are not covered under the agreement and remain subject to an additional 10 percent tariff under Section 232.

US – U.K. tariff talks continue

  • No significant update on U.S. and U.K. talks on resolving the Section 232 tariff disputes. Secretary of Commerce Raimondo, Ambassador Tai, and U.K. Secretary of State for International Trade Trevelyan have met virtually, 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.

Section 301 Investigations

U.S. lawmakers hope to see Section 301 exclusions addressed in the anti-China bill

  • Representative Adrian Smith (R-NE), who sits on the House Ways & Means trade panel, told U.S. Inside Trade the American COMPETES Act is missing crucial elements that address U.S.-China trade inequities, including language on Section 301 exclusions. Representative Smith has advocated for the final version of congress’ anti-China bill to include Section 301 provisions that are similar to those incorporated in USICA. “I think there’s obviously a lot of bipartisan interest in this, and clearly the letters in both the House and Senate, I think, show the consensus that USTR’s current process is not sufficient — and actually, I think, creates an arbitrary outcome by not developing a process for most Americans affected by tariffs to not even apply for an exclusion,” said the congressman. Representative Smith went on to note, “There’s bipartisan interest here. I think we can work through this, but again we need to get this right.”
  • 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

Senate narrowly confirms Robert Califf

  • Last week the Senate confirmed President Biden’s nomination of Robert Califf as commissioner of the Food and Drug Administration (FDA) by a 50 to 46 vote. FDA plays a leading role in regulating the manufacturing and processing of agriculture and food products and participates in aiding the Biden Administration’s response to the global pandemic.
    • A former cardiologist, Califf previously served as FDA commissioner for a year toward the end of the Obama Administration and is presently a professor of medicine at the Duke University School of Medicine, where he previously served as Vice Chancellor, founded the Duke Clinical Research Institute, and also works as Head of Clinical Policy at Verily Life Sciences.  President Biden nominated Califf last November after a lengthy search as progressive Democrats expressed concerns with prospective nominees, including Califf, with potentially strong ties to large pharmaceutical companies.

Sushan Demirjian named acting AUSTR

  • Assistant U.S. Trade Representative (AUSTR) for small business, market access and industrial competitiveness Jim Sanford has retired. The AUSTR position, which has been held by Sanford since 2008, will be filled by Sushan Demirjian in the interim. Demirjian joined USTR in 2007 and has “led market access negotiations in USMCA and with Japan, UK, Kenya, TTIP, TPP, and the Doha Round,” according to the USTR website.

U.S. – Ecuador

Julio Jose Prado, Ecuador’s Minister of Foreign Trade

U.S. and Ecuador hold TIC meeting

  • USTR Ambassador Jayme White travelled to Ecuador to meet with a delegation headed by Ecuador’s Minister of Production, Foreign Trade, Investment and Fisheries, Julio Jose Prado. Together the two officials, alongside a group of American and Ecuadorian business representatives, convened the fourth meeting of the U.S.-Ecuador Trade and Investment Council (TIC).  
    • During the TIC meeting, Ambassador White and Minister Prado “reaffirmed their commitment to pursuing a bilateral trade policy that is resilient, supports workers, protects our shared environment, and fosters equitable growth.”
    • Delving into the topic of agriculture, the two sides expressed their interest in “improving the import licensing system.”
    • Additional conversations were held regarding child labor, technical cooperation, conservation, and climate change. “Developments in implementing regulations for the fisheries and aquaculture sectors were presented, including efforts to combat illegal fishing and progress to conserve marine resources,” according to a joint statement on the meeting.
    • The officials also reviewed the Protocol on Trade Rules and Transparency and “the next steps for the renewal of the Generalized System of Preferences (GSP) [were] addressed, as well as the U.S. Congressional interest in strengthening the U.S. – Ecuador relationship”

Indo- Pacific Economic Framework

Australia expresses enthusiasm for IPEF

  • Australia’s Minister for Trade, Tourism and Investment Dan Tehan said Australia “warmly welcomes” the U.S.’ Indo-Pacific Economic Framework (IPEF) during an interview with Inside U.S. Trade. Minister Tehan expressed his optimism with the IPEF, noting the framework is “going to be comprehensive” and “there will be many elements to it,” including a “serious digital component.” The Minister went on to explain the IPEF’s potential for “meaningful outcomes,” highlighting that by laying out groundwork on supply chains, the digital economy, and the green economy, trust would grow between IPEF partners. “You could end up at a point where there is such confidence … and there’s such understanding that this is so mutually beneficial to the future of our region and jobs and the economies of the Indo-Pacific that you can then look at other ways which would enhance that, such as further trade liberalization,” said Minister Tehan. Australia isn’t the only country interested in the IPEF. Minister Tehan said the message from other countries in the region was clear. Singapore, Vietnam, Japan, and South Korea are all “looking for that enhanced U.S. economic engagement in the Indo-Pacific.”

Senate foreign relations leaders support IPEF

  • Senate Foreign Relations Committee applauded the Administration’s new Indo-Pacific strategy as a tool to compete in the region with China. Committee Chairman Bob Menendez (D-NJ) and ranking Republican Jim Risch (R-ID) said in a joint statement, “Competition from China demands a strong and collaborative response from the United Sates and our allies to keep the region free and open.” They continued, “We expect continuous consultation with the administration as the Indo-Pacific strategy is implemented, and that the strategy will be reflected in the president’s budget request.”  The senators emphasized stronger U.S. engagement in the region has bipartisan support.
    • Multiple influential trade association are calling for a broader approach to IPEF, including market access. The American Farm Bureau Federation President Zippy Duvall said that the proposed economic framework is not enough. “More trade advances are needed in the region, and soon,” he said. “The US is long overdue for a binding multilateral trade agreement with the Indo-Pacific that outlines consistent standards and improves market access through the reduction of tariffs. America’s farmers and ranchers need to be able to compete fairly in the world market.”
    • The Coalition for Services Industries (CSI) said IPEF should include market access provisions on digital trade and services. CSI called for IPEF to include strong provisions on digital trade and the Administration also should negotiation an Asia Pacific digital trade pact with likeminded countries. “Close collaboration with allies in the region will be key to combating Chinese unfair trade practices and its negative influence on regional digital policies,” the Coalition said. “The Indo-Pacific Economic Framework should only include countries that are willing to commit to high standard principles and/or disciplines. The US should also negotiate market access provisions in the IPEF.”

U.S. – Russia

Senators push for Russian seafood ban

  • Senators Dan Sullivan (R-AK) and Lisa Murkowski (R-AK) introduced the U.S.-Russian Federation Seafood Reciprocity Act, which would embargo all seafood imports from Russia in retaliation against the Russian ban on U.S. seafood products that has been in place since 2014. Commenting on the current one-sided trade situation between the United States and Russia, Senator Sullivan described the harm of Russia’s prohibition on the U.S. seafood industry, “Vladimir Putin is benefiting enormously at the expense of our fishermen here at home, with the value of Russian seafood imports to the U.S. growing 173 percent since 2013, the year before the embargo was imposed.” He went on to note, “the Senate’s urgent interest in sanctioning Russia for its ongoing threats to Ukraine presents a window of opportunity to correct this unacceptable trade imbalance.”

U.S. – Middle East

USDA scouts for new trade opportunities in the UAE

  • The U.S. Department of Agriculture sent officials to Dubai for the department’s first trade mission since 2019. Foreign Agricultural Service Administrator Daniel Whitley and Secretary of Agriculture Tom Vilsack set off to look for new opportunities for U.S. agricultural markets in the United Arab Emirates. “With annual agricultural exports averaging more than $1.2 billion during the last five years, the United States is the UAE’s fourth-largest supplier of food and farm products and is poised for further export growth,” stated a press release on the mission. While in the Middle East, Administrator Whitley and Secretary Vilsack will “conduct business-to-business meetings with potential customers, receive in-depth market briefings from FAS and industry trade experts, and participate in site visits, including the annual Gulfood Show, and the Dubai Expo 2020.”
Image of Dubai from USDA

U.S. – EU

TTC to be vehicle for pursuing common trade goals with the EU

  • At a Los Angeles Chamber of Commerce event, Assistant U.S. Trade Representative Dan Mullaney discussed the potential for the U.S.-EU Trade and Technology Council (TTC) to aid the Biden Administration in its goal of “doing things differently” in terms of trade policy. “It may well be that a more tailored approach with the European Union, for instance, in the Trade and Technology Council, might be a more effective way of achieving [] common goals,” said AUSTR Mullaney. The representative touched on numerous ways of utilizing the TTC in achieving new trade relationships and producing new trade tools but didn’t dive into specifics. “There may be different tools available and I think that’s where part of the challenge and opportunity comes, frankly – working with good allies like the European Union to figure out how we can reinforce each of our efforts to pursue these common goals, and yet, recognize that we probably have some different interests and some different ways of pursuing those goals,” added Mullaney.
    • The U.S. and EU intend to convene the TTC for its second meeting in May where officials are planning to discuss concerns pertaining to technology standards, climate, supply chains, data governance, and export controls, among other pressing issues.

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

Strong bilateral trade ties

  • The U.K. was the United States’ seventh-largest goods trading partner and its largest services trading partner in 2020, according to a Congressional Research publication. The U.K. comprised 5% of total U.S. trade, and the U.S. was nearly one-fifth of total U.K. trade.
Share of U.S. and UK Total 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

Ngozi Okonjo-Iweala, WTO Director-General

Tackling climate change through trade

  • Director-General (DG) Ngozi Okonjo-Iweala reemphasized climate-related trade policy as a key agenda priority for the WTO. At an online event hosted by the government of Bangladesh, DG Okonjo-Iweala discussed “how climate priorities can be addressed through trade action through prioritizing the specific challenges faced by least developed countries (LDCs) and small island developing states (SIDS).” “A new joint policy note produced by the WTO and the World Bank makes clear that trade will be critical in driving the post-pandemic recovery,” said the DG. Going on to explain the importance of developing low-carbon infrastructure and sustainable economies, DG Okonjo-Iweala shared how the Aid for Trade Initiative and new international frameworks could be utilized to promote green development. “Indeed, lowering trade barriers to environmental goods and services would reduce the cost of renewable energy and lower the capital costs of building climate-resilient infrastructure,” the DG said, “In sum, LDCs are in need of support for a green transition and the WTO can play a key role in that regard. LDCs should not be left behind.”

MC12 in early June under consideration

  • This week WTO members will consider reconvening the 12th ministerial in early June. Honduran Ambassador Dacio Castillo, the General Council chair, is looking at June 2-4 and the week of June 13th as potential dates for MC12.  In a message to member countries Castillo said, “I would therefore appeal to delegations to come prepared for a focused discussion on the date of MC12.” “This will assist us in our deliberations on this matter at the regular meeting of the General Council on 23-24 February.”
  • 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.

Countries remain divided on Fisheries talks priorities

  • A group of developing nations are urging special and differential treatment (S&DT) take priority in Doha fisheries subsidies negotiations. The group asked the Fisheries negotiation chair, Ambassador Santiago Wills (Colombia) to address S&DT territoriality before non-fuel specific subsidies, among other fisheries issues. In contrast, the EU , Canada and the U.K. insist S&DT must wait to be resolved by trade ministers at the WTO’s 12th ministerial conference once rescheduled. Ambassador Wills reportedly planned to proceed with small group consultations on issues concerning territoriality and fuel-specific subsidies to be followed later by other issues like forced labor and S&DT.