TRADE UPDATE

Food & Agriculture
April 12, 2022

By Michael Anderson, Vice President of Trade and Industry Affairs

HIGHLIGHTS

  • USMCA: Mexico will allow imports of U.S. fresh potatoes nationwide no later than May 15, according to a USDA announcement, following meetings between Agriculture Secretary Tom Vilsack and Mexican Secretary of Agriculture and Rural Development Victor Villalobos, after a 25-year long trade complaint by the U.S. potato industry. Secretary Vilsack last week also discussed Mexico’s lack of biotech approvals with Mexican President Lopez Obrador and said he hoped the discussion would “create momentum” for the Mexican government to reconsider its stance on biotechnology.
  • U.S. – China: China made an unusually large purchase of U.S. corn following reports of uncertainty about Ukraine’s ability to export their products. Meanwhile, the China competition bill inches forward towards a conference as the House recently announced its participating conferees.
  • Indo-Pacific Economic Framework: Indo-Pacific Economic Framework (IPEF) talks may launch in a matter of weeks, according to a Dept. of Commerce administration official. “We are hopeful that in the next month or so we should be in a position to potentially launch and to launch with more than just a handful of countries.”
  • U.S – Russia: The Senate voted (100-0) to suspend permanent normal trade relations (PNTR) with Russia and Belarus and passed separate legislation banning Russian energy and oil imports, moving swiftly to rachet up more economic sanctions on Russia for invading Ukraine. Last Friday President Biden signed both pieces of legislation.
  • WTO: Tensions at the WTO continue to escalate over Russia’s invasion of Ukraine, potentially placing the 12th Ministerial meetings in jeopardy. Most recently, Russia defended the bid of Belarus to join the WTO, arguing the U.S., the EU, and others cannot “unilaterally” sink the accession bid of Belarus. The U.S. and the EU have said Belarus is “unfit” for membership and intend to oppose its accession.

“Africa remains a continent of untapped potential for U.S. agricultural exports. In 2021, only one African country (Egypt) was in the United States’ top 25 agricultural export markets, and only two additional countries (Nigeria and Morocco) were in the United States’ top 50 agricultural markets – but we expect this to change significantly in the future.”

— Daniel Whitley, FAS Administrator, testifying before the House Subcommittee on Livestock and Foreign Agriculture

USMCA

Mexico commits to market access for U.S. potatoes

  • Secretary Vilsack and Secretary Villalobos reached an agreement on Mexican market access for U.S. fresh potatoes, following meetings in Mexico. After over a decade long dispute, Mexico will open its market to U.S potatoes by May 15th. “Vilsack and Villalobos announced that the United States and Mexico have concluded all necessary plant health protocols and agreed to a final visit by Mexican officials in April that finalizes expanded access to the entire Mexican market,” according to USDA news release on the agreement.
  • The potato industry applauded the breakthrough, cautiously monitoring Mexico’s follow through actions.  “The National Potato Council appreciates today’s positive announcement and thanks Secretary Vilsack and the teams at USDA and USTR for their efforts to ensure that Mexico lives up to its bilateral trade obligations,” NPC said in a news release. “Given the history of this 25-year trade dispute, we are waiting to declare victory until we see durable exports of both fresh processing and table-stock potatoes throughout all of Mexico as required by the November 2021 signed agreement. We hope the April site visit by Mexican officials will be the last hurdle we need to clear and that no last-minute roadblocks will be erected prior to Mexico finally – and permanently – reopening its border to U.S.-grown potatoes.”
    • NPC noted that “Mexico is the largest export market for U.S. potatoes and products valued at $394 million in 2021. Despite the restriction to the 26-kilometer border region, Mexico is the second-largest market for fresh potato exports, accounting for 124,449 metric tons valued at $60 million in 2021. The U.S. potato industry estimates that access to the entire country for fresh U.S. potatoes will provide a market potential of $250 million per year, in five years.”

Vilsack and Villalobos discuss shared agriculture goals

Secretary Vilsack, U.S. Ambassador to Mexico Salazar, and Secretary Villalobos hold joint press conference
  • During his trip to Mexico, U.S. Secretary of Agriculture Tom Vilsack met with Mexico Secretary of Agriculture and Rural Development Victor Villalobos to discuss their countries’ shared ag goals in the realms ofopen trade, science-based policy making, and sustainable and climate-smart agricultural production.”  The two secretaries intend to pursue such goals through their mutual commitment to:
    • “promoting food security by facilitating trade and inclusive rural development and enabling sustainable productivity growth;
    • continuing to support rural development by expanding market opportunities for agricultural producers and their products;
    • helping small producers and new farmers, particularly with respect to developing local and regional markets;
    • tackling climate change by giving farmers access to tools and technologies that enable them to increase production while minimizing their environmental impacts; and
    • enhancing plant and animal health cooperation to meet emerging threats and to promote food security.”

Vilsack discusses biotech approvals with President Lopez Obrador

  • Secretary Vilsack on his recent trip to Mexico also met with President Lopez Obrador to deliberate on the country’s lack of biotech approvals, which include at least 25 pending biotechnology traits involving a range of crops. Vilsack told reporters that he stressed the lack of access to biotechnology could raise food costs as he pointed to the possibility of Mexican cattle feeders being potentially forced to rely on non-GM feed, which would be “incredibly expensive.” Vilsack continued, “It was very helpful for me to meet with the president.” Vilsack told reporters, “There was a robust discussion about this. I think I made an impression.” He went on to acknowledge the complexity of the trade irritant but expressed optimism the discussion with President Lopez Obrador will “create momentum” for the Mexican government to reconsider its stance on biotechnology. 

Lawmakers reject Canada’s dairy TRQ proposal

  • A bipartisan group of eight members of congress signed a letter addressed to Ambassador Tai and Secretary Vilsack, insisting that Canada’s recent dairy TRQ proposal continues to fall short of USMCA requirements. As such, the lawmakers urged the Administration “to insist on much deeper reforms to bring Canada’s dairy TRQ allocation system into compliance with its USMCA commitments.” According to the representatives, Canada’s current proposal would “exclude major swaths of its food and agricultural sector from the TRQ by blocking access of retailers and food service companies.” Additionally, the adjustments would “continue to deliver the bulk of the TRQ volumes to U.S. dairy manufacturers’ Canadian competitors.”
    • Last month, Canada released its proposed policy changes in response to a USMCA panel ruling 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. The changes, which propose to allocate shares of TRQs to “processors and distributors on a market share basis,” instead of just “processors on a market share basis,” have been rejected by numerous U.S. officials and dairy industry stakeholders.

China Trade

China makes large purchase of U.S. corn

  • According to a report from Agri-Pulse, China recently made a major purchase of U.S. corn due to uncertainty regarding Ukrainian ag exports. USDA published information on the purchase at the beginning of this month, showing China bought 1,084,000 metric tons of U.S. corn, 676,000 metric tons of which are meant to be delivered during the 2021/2022 marketing year.
  • Last year, China increased its corn purchases from Ukraine, buying up to 600,000 tons from the country as estimated in a Beijing Foreign Agricultural Service report. As a result of the Russia-Ukraine conflict, there is much uncertainty about how much of the Chinese bought corn was able to leave the Black Sea for export.
  • China has now turned to the U.S. to meet its corn import needs, much to the satisfaction of U.S. corn industry actors. For example, U.S. Grains Council President and CEO Ryan LeGrand, in conversation with Agri-Pulse, commented on the news, “We are very pleased to see continued demand by China for U.S. corn. Today’s purchase brings them close to 13 (million metric tons) of known purchases for the current crop year and secures additional supplies for 2022-23. The U.S. is in a great position to continue supplying China’s robust demand for corn.”

China competition bill inches forward

  • House Speaker Nancy Pelosi (CA-D) and Minority Leader Kevin McCarthy (CA-R) announced the members of the House of Representatives that will participate in the China competition bill conference. The House leaders named 81 conferees, including leaders of the House Ways & Means Committee and trade subcommittee. The conference will aim to find a compromise between the Senate’s USICA and the House’s America COMPETES Act. Both bills aim to enhance American competitiveness in the face of anti-competitive Chinese action through investment in semiconductor chips, supporting supply chains and manufacturing, conducting scientific research, and enforcing targeted anti-China measures. Major differences between the two pieces of legislation include the presence of language regarding Section 301 exclusions and the strictness of GSP eligibility and de minimis criteria, among other variations.
  • Participants of the conference will include Representatives Richard Neal (MA-D), Kevin Brady (TX-R), Earl Blumenauer (OR-D), and Adrian Smith (NE-R). Speaking on his upcoming participation in the competition bill conference, Representative Neal said he looks forward “to advocating for the America COMPETES Act.”

COVID-19

Trade deficit remains high

  • The U.S. international trade in goods and services deficit shrank less than $0.1 billion from January to February 2022. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis posted that the deficit was $89.19 billion in February, just slightly lower than the record January value of $89.23. Exports of goods and services for February were $228.6 billion, up 1.8%. Imports of goods and services for February were $317.8 billion, up 1.3%.

Global food prices reach new record high

  • The Food and Agriculture Organization’s (FAO) Food Price Index averaged 159.3 points in March 2022, up 17.9 points (12.6 percent) from February, surging to its highest level since its inception in 1990. The FAO’s gauge of global prices has jumped about 75% since mid-2020, surpassing levels seen in 2008 and 2011 that contributed to a global food crises. The price surge in March constitutes a seventh straight quarterly gain, the longest such run since 2008.
    • Surging vegetable oil prices continued unabated in March, fueled by reduced export supply from the Black Sea region.  The FAO’s Vegetable Oil Price Index averaged 248.6 points in March, up 23.2 percent or 46.9 points from February and hitting a new record high.
    • The FAO raised its outlook for global grain stockpiles – usually a good sign for supplies – but reported rising stock is driven by transportation bottlenecks for grains originating in the Black Sea region. Ukraine’s exports will be particularly hard hit from the war, with wheat shipments falling 5 million tons and corn down 12.5 million tons from a previous estimate.
    • The FAO noted that significantly reduced corn export expectations for Ukraine, a major exporter, on top of elevated energy and input costs, contributed to a 19 percent increase in world prices in March.

Global Food Supply

Curbing the global food crisis

  • The Biden Administration is racing to limit the spillover effects of the Ukraine-Russia conflict. A chief concern of the President and his global counterparts is global hunger and an impending food supply crisis, particularly in the Middle East and Africa. So far, President Biden has committed $1 billion in U.S. aid to address the impacts of the Ukraine-Russia conflict and Congress approved $4 billion in aid for Ukraine and Ukrainian refugees, but the Administration’s ambitions to help don’t stop there. According to Politico, “the administration plans to unlock additional international food aid in the coming days, including the Bill Emerson Humanitarian Trust — a federal cash reserve of $260 million the government keeps to buy U.S. grain and other commodities to send to foreign countries in crisis.”
  • Several U.S. lawmakers are also pushing to increase humanitarian assistance in an effort to counter impending global food shortages. In a letter to President Biden, Senators Bob Menendez (NJ-D) and Jim Risch (ID-R) urged “the administration to take immediate action, in coordination with international partners, to develop and implement a comprehensive strategy to improve the timeliness and expand the reach of international emergency and development food assistance.” The two senators go on to identify the Food Assistance Act of 1961, the Global Food Security Act of 2016, and the Food for Peace Act as avenues to address the food crisis.

Supply Chains

Controversial supply chain review legislation up for conference

  • As the China competition bill continues to move forward towards a formal conference, several U.S. lawmakers continue to push for the inclusion of a supply chain review bill that proposes a controversial outbound investment review process. According to Inside U.S. Trade, the legislation “would create the interagency Committee on National Critical Capabilities, chaired by the Office of the U.S. Trade Representative, which would be tasked with reviewing outbound investments in critical industries to certain foreign markets and be enabled to block some transactions.” Originally introduced by Senators John Cornyn (TX-R) and Bob Casey (PA-R), the National Critical Capabilities Defense Act did not make it into the Senate’s USICA. Despite this, a companion bill was included in American COMPETES Act. Now, members of congress must decide if the provision will be included in the final trade title of the China competition bill.

U.S. supply chain strains rising

  • U.S. supply chain pressures worsened in March for a second straight month as the war in Ukraine pushed commodity prices higher and aggravated logistics logjams, according to an Oxford Economics report. “Businesses are learning to work around ongoing constraints but ramping up inventory growth will remain a challenge given the prevailing economic landscape,” Oxford’s economists wrote in the report. On a slightly more positive note, inventory growth strengthened, making stockpiles less lean, the report said.

Ukraine

Crop shortages expected in Ukraine

  • Ukrainian ag consulting group UkrAgroConsult is forecasting sharp cuts in domestic production. The group projected last week that Ukrainian farmers would likely produce just 19 million metric tons of corn this year, down from 42 million last year. Wheat production this year is expected to be about 19.8 million metric tons, the group said. USDA has estimated Ukraine’s 2021 wheat production at 33 million metric tons. The group said the projections were averages between the best case and worse case scenarios.

Indo- Pacific Economic Framework

Ambassador Tai meets with Prime Minister Lee

Ambassador Tai’s trip to Singapore

  • USTR’s Ambassador Katherine Tai flew to Singapore to reiterate the Biden Administration’s goal of increasing regional connectivity in the Indo-Pacific. She started off her trip by convening with Singapore’s Minister of Transport S Iswaran to discuss IPEF. Following Ambassador Tai’s conversation with Minister Iswaran, the U.S. Trade Representative met with Singapore’s Minister for Trade and Industry Gan Kim Yong to expand on the discussion of IPEF and to continue the two officials’ dialogue on “key issues following the meeting of the FTA Joint Committee on October 8, 2021.  In particular, Ambassador Tai welcomed recent engagement on trade and environmental issues, including review of the implementation of environmental commitments under the FTA Environment chapter.” The Ambassador kept herself busy in Singapore, especially in regard to IPEF, as she followed her meeting with Minister Gan with yet another conversation on Indo-Pacific trade with Singapore’s Prime Minister Lee Hsien Loong.

IPEF talks may launch next month

  • Formal negotiations on the Biden Administration’s Indo-Pacific Economic Framework (IPEF), a key trade initiative to counter China’s increasing economic influence in the region, may commence in a matter of weeks, according to Administration officials.  “We are hopeful that in the next month or so we should be in a position to potentially launch and to launch with more than just a handful of countries,” said Pamela Phan, the International Trade Administration’s deputy assistant secretary for Asia. Last month Deputy USTR Sarah Bianchi said the details of the IPEF would be coming in “weeks, not months.” Bianchi has noted that the efforts have been slowed by other world events, such as Russia’s invasion of Ukraine.
    • The Commerce Department and the office of USTR are jointly leading IPEF negotiations, with USTR responsible for the pillar on fair and resilient trade, and Commerce taking the lead on the three other pillars regarding clean energy, supply chains, and tax and anti-corruption.

House lawmakers push to prioritize agriculture in IPEF

  • A bipartisan group of House Members, led by Representatives Jimmy Panetta (CA-D), Jodey Arrington (TX-R), Jim Costa (CA-D), Dusty Johnson (SD-R), Ron Kind (WI-D), and Randy Feenstra (IA-R), sent a letter to Ambassador Katherine Tai and USDA Secretary Tom Vilsack, urging them to make agriculture a priority in the IPEF, including addressing tariff and non-tariff barriers. The letter was timed in conjunction with Ambassador’s Tai testimony on the Biden’s Administration 2022 trade policy agenda before the House Ways and Means committee on March 30th.
    • In the letter, the lawmakers argued tariff liberalization was a vital component to IPEF, contrary to USTR and Commerce’s statements on excluding “market access” from the framework. The letter noted, “The Framework should also include efforts to reduce tariffs on U.S. agricultural exports to improve our competitiveness in the region. While we understand the Framework will not initially be a comprehensive trade agreement that deals broadly with tariffs, this should not preclude efforts to increase agricultural market access by reducing our trading partners’ tariffs, both in the interest of U.S. exporters and our trading partners’ interest in enhancing their access to high quality, affordable agricultural products.”

U.S. – Russia

Senate approves suspension of Russia’s PNTR status

  • The U.S. Senate voted (100-0) to suspend permanent normal trade relations (PNTR) with Russia and Belarus. During the same session, the Senate also passed legislation banning Russian energy and oil imports. Speaking on the importance of these two pieces of legislation U.S. Senate Finance Committee Ranking Member Mike Crapo (ID-R) said “Congress must insist through meaningful certification criteria that Russia and Belarus continue to suffer these consequences until their war of aggression ceases and Ukraine’s right—along with that of our NATO allies—to be free and secure is restored.” 
  • Last Friday, President Biden signed both bills (H.R. 6968 and H.R. 7108), suspending PNTR for Russia and prohibiting the import of Russian energy products, ratcheting up policy actions to punish Russia’s invasion of Ukraine.

Russian seafood sanctions hit a snag 

Congressman Cliff Bentz (OR-R)
  • Despite the unanimous approval of the suspension of Russia’s PNTR status, partisanship remains on other key legislation meant to economically hinder Russia for its continued attack on Ukraine. According to reports, a proposed ban on Russian seafood is one of those contentious issues. Both republicans and democrats agree that U.S. action is needed, regarding the import of Russian fish, but members of the two parties have run into a stalemate on the proper identification process for assessing seafood of Russian origin.
    • This issue stems from the democratic push to update the current Seafood Import Monitoring Program (SIMP), due to identified problem areas in the program’s functioning. As of current, SIMP only tracks a limited number of seafood species and has difficulty tracking seafood imports of Russian origin that are sent to a secondary location for processing. House democrats want to pass legislation to update SIMP before passing the proposed sanctions on Russian seafood. Because said legislation is currently written into the American COMPETES Act, which continues to await conference, House republicans don’t want to have to play the waiting game to move forward with the sanctions.
    • Representative Cliff Bentz (OR-R) is one of the House republicans that want the sanctions passed ASAP. “The SIMP approach is too burdensome,” said the lawmaker, “And if we use SIMP, we can’t rely on an immediate impact.”

Section 232 Investigations

Senators want to lift 232 steel tariffs off Ukraine

  • U.S. lawmakers have explored several pathways to show their support for Ukraine amid the country’s conflict with Russia. Now, two members of congress, Senator Dianne Feinstein (CA-D) and Senator Patrick Toomey (PA-R) propose the Administration should go even further with these efforts and lift U.S. 232 tariffs off Ukrainian steel. The senators argue, “The United States should do everything it can to ensure that the Ukrainian people can effectively rebuild after the war.” Steel and related sectors make up 12% of Ukraine’s GDP and as such “Lifting the U.S. tariff on steel from Ukraine is a small but meaningful way for the U.S. to signal support for Ukraine.”

Section 301 Investigations

Trump-era China tariffs set for review

  • The first round of Section 301 tariffs imposed under the former Trump Administration on Chinese imports are approaching their four-year mark in July, triggering a congressionally mandated review. The Section 301 tariffs will expire four years from the time they were imposed unless the Office of the U.S. Trade Representative has analyzed their effectiveness. That evaluation must happen within 60 days of their potential expiration. The Biden Administration has kept the Section 301 tariffs as leverage over China to meet its purchase targets and other commitments in the Phase One trade deal, according to many trade experts.
    • The pending review process may compel the Biden Administration to seriously consider the status of the tariffs and their effectiveness going forward. The review will likely provide industry groups and other interested parties a fresh opportunity to pressure USTR into rolling back the trade penalties, or at least expanding its plans to offer exclusions.

Biden Transition

Senators call on Biden to fill agricultural trade vacancies

  • In a letter to President Biden, Senators Debbie Stabenow (MI-D), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, John Boozman (AR-R), Ranking Member, and Mike Crapo (ID-R), Ranking Member of the Senate Committee on Finance, called for the swift nomination of a candidate to serve as the Chief Agricultural Negotiator at USTR and a candidate to serve as the Undersecretary for Trade and Foreign Agricultural Affairs at USDA. The Senators wrote, “Global agricultural markets are highly competitive. Every day, new trade barriers against American agricultural products are being devised to limit our access. We need strong advocates who understand the needs of American farmers, ranchers, and foresters, and will represent their best interests on the world stage.”

U.S. – EU

Request for comments on the TTC

  • The Department of Commerce published a request for public comments on supply chain resiliency for the U.S. – EU Trade and Technology Council’s Secure Supply Chains Working Group. Comments should focus on supply chains for “semiconductors; solar photovoltaics; critical minerals and materials including rare earth magnets, lithium-ion batteries, and material inputs to semiconductors; and pharmaceuticals.” The comments will be used to inform the work of the Secure Supply Chains Working Group, which is one of ten TTC working groups designed to progress shared U.S. – EU trade and technology goals. The Secure Supply Chains Working Group specifically seeks to:
    • “increase visibility and transparency of supply and demand;
    • map respective existing sectoral capabilities;
    • exchange information on policy measures and research and development priorities; and
    • cooperate on strategies to promote supply chain resilience, security, and diversification.”

U.S. – Africa

Daniel Whitley, FAS Administrator

The continent of “untapped potential”

  • Administrator of the Foreign Agricultural Service (FAS), Daniel Whitley, highlighted the continent of Africa as a major future market for U.S. agricultural exports. Testifying before the House Subcommittee on Livestock and Foreign Agriculture, he noted that in 2021, only one country in Africa (Egypt) made it on the U.S.’ top 25 ag export markets list, but Mr. Whitley expects that statistic “to change significantly in the future.” “A key development for trade across Africa is the 2019 ratification of the African Continental Free Trade Area (AfCFTA) that aims to create a continental market for goods and services with a harmonized trade facilitation regime,” said the Administrator. Once negotiations conclude, Mr. Whitley predicts AfCFTA “will be one of the largest trading blocs in the world.”

U.S. – U.K. Trade

Little hope for U.S. – U.K. FTA

  • Despite the U.S. and U.K.’s recent agreement to ease Trump-era 232 steel and aluminum tariffs, it seems unlikely the two countries will negotiate a free trade agreement at this time. Ambassador Katherine Tai recently remarked, “A free trade agreement is a tool. A very 20th Century tool,” indicating USTR would rather move forward with new trade-enhancing tools in building its trade relationships under the current Administration, instead of the traditional market access, tariff-focused approach. British experts have gone on record to affirm they see little likelihood of a U.S. – U.K FTA under President Biden. Dr. Peter Holmes, a fellow at the University of Sussex’s UK Trade Policy Observatory, told the Daily Express “The British Government is not the natural partner of a Biden administration. Biden does not feel opening US markets to British exports is the top priority for trade policy.” Dr. Holmes went on to note the EU is a trade partner that’s more aligned with the current US trade agenda, citing the Global Arrangement, carbon reduction, and worker centered trade as priorities of both governments.

WTO

Republican lawmakers push for transparency on TRIPS Waiver

  • Following a WTO announcement that the U.S., EU, India, and South Africa reached a deal on the Trade Intellectual Property Rights (TRIPS) agreement, which corresponded with the release of a leaked text on the same issue, U.S. policymakers expressed their concern over the lack of congressional oversight during the TRIPS compromise process. Since then, GOP members of congress introduced legislation that would require USTR to consult with congress on negotiations to modify or suspend WTO trade agreements.
  • The legislation, dubbed the Protecting American Innovation Act, was introduced by a group of republican politicians led by Ways and Means Trade Subcommittee Republican Leader Adrian Smith (NE-R) and Health Subcommittee Republican Leader Vern Buchanan (FL-R). Commenting on the new legislation Representative Smith said, “The United States can and should help increase global access to COVID-19 vaccines, but we also have a duty to protect the hard work, investment, and intellectual property of American innovators.” He went on, “Unfortunately, President Biden has failed to defend American interests as negotiators look for ways to vaccinate the world, and I have serious concerns about the precedent that could be set by simply handing over the keys to America’s innovation engine. Rather than taking political shortcuts and throwing IP protections out the window, let’s focus on lowering the true barriers to access – technical expertise, shortage of raw materials, and supply chain infrastructure – to get these vaccines to every corner of the world.”

Russia defends Belarus’ WTO accession

  • Russia defended the bid of Belarus, a key ally, to join the WTO, elevating tensions between Russia and other WTO members, particularly the U.S. and EU.  Russia maintains that the U.S., the EU, and others cannot “unilaterally” sink the accession bid of Belarus to join the WTO.  Russia argued these countries don’t have the authority to determine whether Belarus will terminate its accession bid or not.
    • “[A]ny State possessing full autonomy in the conduct of its external commercial relations may accede to the WTO on terms to be agreed between it and the WTO,” the Russian communication says, citing the Marrakesh Agreement, which formed the WTO. “Nothing in the WTO Agreement stipulates that individual Members or a group of Members can unilaterally decide that a legitimately acceding State could be ‘unfit for WTO membership’ with the goal of imposing suspension or total dismantling of the accession process.”
    • “Only the acceding State can suspend its accession bid or terminate the accession,” Russia maintained. The declaration by the U.S., EU, and others that they “will not further consider [Belarus’] application for accession” just means that these members are leaving the country’s working party, which negotiates with Minsk the terms on which it will join the WTO, Russia said.
    • The U.S., EU, and allies have condemned Russia’s invasion of Ukraine and Belarus’ complicity in such actions, arguing that neither should benefit from WTO membership. Belarus is in the midst of undertaking steps to join the WTO.  The U.S. and the EU have said Belarus is “unfit” for membership and intend to oppose its accession. 

MC12 in doubt over Russian invasion of Ukraine

  • Fresh doubts have emerged about whether the World Trade Organization’s 12th ministerial conference or MC12 will actually occur during June 12-15 as planned due to Russia’s continuing war against Ukraine. Several countries are pushing to exclude Russia from negotiating key decisions – and even from participating in MC12 – which would further complicate holding the meetings as scheduled.
    • During an informal General Council meeting last week, GC Chair Ambassador Didier Chambovey of Switzerland said, “delegations stressed that MC12 should be a streamlined, business-like Conference.” He indicated that “it is foreseen that the Conference begins with a short opening ceremony on Sunday, 12 June, in the afternoon, without a debate, and then moves on to business from 13 until 15 June.” However, he did not elaborate on what he meant by “a streamlined, business-like Conference.”

U.S. continues to block AB

  • The U.S. recently rejected an appeal from over 100 WTO member countries to restart selections to fill the vacant positions on the Appellate Body that has remained nonoperational since December 2019, when the U.S. blocked the final expiring seats. 
    • During a WTO Dispute Settlement Body meeting, U.S. officials reiterated its “systemic concerns” with the AB as justification for not considering a process to select new AB members. The U.S. has maintained that AB reform is critical to better support the WTO’s negotiating and monitoring functions. However, around 20 members reiterated the importance of the WTO’s two-tiered dispute settlement system to the stability and predictability of the multilateral trading system. Several members argued the continued impasse is adversely impacting commercial activity and systemically harming multilateral trade.

Ag Economy Barometer

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

  • The March Ag Economy Barometer declined 12 points to an index reading of 113, the lowest reading since the early days of the global pandemic. The March 2022 reading was 36% lower than one year ago (March 2021). Supply chain issues and rising input cost for farming operations continue to weigh heavily on farmer sentiment, which are compounded by the conflict in Ukraine.
    • Regarding upcoming input prices, 57% of producers said they expect farm input prices to rise by 20% or more and 36% expect input prices by rise by 30% or more.
    • Regarding questions on the impact of the conflict in Ukraine on U.S. agriculture, input costs was most often cited (63% of respondents), followed by crop prices (33% of respondents) and livestock prices (3% of respondents).
  • Agriculture producers continue to curtail or reassess investment plans due to market uncertainty and supply chain issues, with over 60% of producers indicating their farm machinery purchases and construction plans for 2022 are lower than last year.