TRADE UPDATE

Food & Agriculture
April 18, 2023

By Michael Anderson, Vice President of Trade and Industry Affairs

SUBSCRIBE

HIGHLIGHTS

  • USMCA: USDA has extended the comment period until June 11 on the proposed rule for a voluntary “Product of USA” labeling claim on meat. The 30-day extension was granted after receiving requests to extend the deadline from industry producers and the government of Canada. In contrast, consumer groups opposed the extension, urging the Administration to implement the rule without delay.
  • U.S. – China: The House Ways and Means Committee will hold a hearing on Apr. 18 at 2 p.m. in 1100 Longworth House Office Building on China’s trade and investment agenda. The hearing, “Countering China’s Trade and Investment Agenda: Opportunities for American Leadership,” was announced by Ways and Means Chairman Jason Smith (R-MO) and Trade Subcommittee Chairman Adrian Smith (R-NE) last week.
  • Trade Policy: A Congressional Research Service (CRS) report suggested Congress should clarify its authority over limited trade agreements such as IPEF and the critical minerals agreement negotiated with Japan and currently under discussion with the EU. The report noted that renewal of Trade Promotion Authority (TPA) “could be a vehicle for setting the criteria for trade agreements requiring Congressional approval.”
  • Trade Policy: A bipartisan group of Senators reintroduced legislation to create a National Manufacturing Advisory Council within the Commerce Department to “advise on how to support our Made in America economy and ensure the U.S. remains the top destination for manufacturing in the world.”
  • WTO: On Apr. 11, the U.S. became the fourth WTO member to submit acceptance of the Agreement on Fisheries Subsidies. Ambassador Katherine Tai presented the instrument of acceptance to WTO Director-General (DG) Ngozi Okonjo-Iweala in Washington, D.C.
  • IPEF: The Commerce Department announced the third negotiating round of the Indo-Pacific Economic Framework (IPEF) will be held May 8-15 in Singapore. The U.S. delegation for the trade pillar will be led by Sarah Ellerman, IPEF Pillar I Chief Negotiator and Assistant USTR for Southeast Asia and the Pacific (Acting).

“There’s a strong desire amongst most of the membership for a two-tier system. Now does the two-tier system mean it’s necessarily the Appellate Body recreated the way it was before? I’m not sure. Can there be ways to have a two-tier system that is somewhat different or more creative? Maybe.”

–WTO Director-General Okonjo-Iweala commenting on WTO dispute settlement reform

USMCA

USDA extends comment period on proposed ‘Product of USA’ label

  • The Food Safety and Inspection Service (FSIS), a sub-agency of USDA, has extended the comment period until June 11 on the proposed rule for a voluntary “Product of USA” labeling claim on meat. The 30-day extension was granted after receiving requests to extend the deadline from the North American Meat Institute and the government of Canada. In contrast the Consumer Federation of America (CFA) and other groups opposed the extension requests. CFA, along with Consumer Reports, Food & Water Watch, and the National Family Farm Coalition, said FSIS “should finalize and implement this rule as soon as possible.”
    • Recall that USDA announced a proposed new labeling regulation on March 13, 2023 regarding the use of “Made in the USA” labeling for certain products. The regulation states that meat, poultry and egg products that are born, raised, slaughtered and processed in the United States, may then be labeled “Made in the USA.” Under current regulations, beef products imported from other countries, which are processed in the US, may fall under the “Made in USA” label. The public comment period was initially open for 60 days with an original deadline of May 12, 2023, but has been extended until June 11, 2023.

USMCA technical consultation on Mexico’s GM corn continue

  • No update on USMCA technical consultations on Mexico’s biotech decree. Over a month has passed since the U.S. requested technical consultation with Mexico and several industry groups and lawmakers have expressed concern that the U.S. should move swiftly to a dispute panel should technical consultations stall or gain little traction. Under USMCA provisions, the U.S. and Mexico have 30 days after receipt of the technical consultations request to meet, “with an aim of resolving the matter cooperatively with 180 days of the request if possible.” USMCA further provides that the complaining party (e.g., U.S.) could “cease technical consultations,” reverting to a dispute settlement procedure “following the meeting.”
  • In a recent Congressional testimony Secretary Vilsack confirmed consultations were underway with Mexico. He stopped short of providing details but emphasized that Mexico continues to purchase U.S. corn and that U.S. officials will continue to emphasize the importance of a science-based trading system under the USMCA in talks with Mexico.
  • Recall that on March 6, The Office of the USTR announced requesting formal technical consultations with the Government of Mexico under the Sanitary and Phytosanitary Measures (SPS) Chapter of the USMCA. The consultations focus on Mexico’s policies and measures surrounding agricultural biotechnology products, including the recently revised Decree to ban certain GM corn imports. In announcing the action, Ambassador Katherine Tai said, “The United States has repeatedly conveyed our serious concerns with Mexico’s biotechnology policies and the importance of adopting a science-based approach that complies with its USMCA commitments,” Ambassador Tai continued, “Mexico’s policies threaten to disrupt billions of dollars in agricultural trade and they will stifle the innovation that is necessary to tackle the climate crisis and food security challenges if left unaddressed. We hope these consultations will be productive as we continue to work with Mexico to address these issues.”

U.S. – China

Ways & Means holds China trade hearing

  • The House Ways and Means Committee will hold a hearing this week on China’s trade and investment agenda. The hearing, “Countering China’s Trade and Investment Agenda: Opportunities for American Leadership,” was announced by Ways and Means Chairman Jason Smith (R-MO) and Trade Subcommittee Chairman Adrian Smith (R-NE) last week. The hearing will be held April 18 at 2:00pm in 1100 Longworth House Office Building.

IMF releases World Economic Outlook Report

  • Last week, the IMF released its World Economic Outlook report. According to the report,  growth in world trade is expected to decline from 5.1 percent in 2022 to 2.4 percent in 2023. Additionally, Global GDP growth is expected to slow to just 2.7 percent in 2023, compared to 6.0 percent in 2021 and 3.2 percent in 2022.
    • The report provides several explanations for the slowdown, including persistent inflation, financial sector turmoil, the ongoing war in Ukraine, and the Covid-19 pandemic.

Food Security

U.S. food prices stable in March

  • U.S. food prices were flat at 0.0 percent in March, after nearly two years of increasing prices, which contrasted with the 0.1 percent increase in the overall Consumer Price Index (CPI). According to the March Consumer Price Index, prices for food consumed at home increased 0.4 percent and prices for food consumed away from home decreased 0.3 percent. Three of the six major grocery store food group indexes decreased over the month. The index for meats, poultry, fish, and eggs decreased 1.4 percent in March as the index for eggs fell 10.9 percent. The fruits and vegetables index declined 1.3 percent over the month, and the dairy and related products index decreased 0.1 percent.
    • According to the Bureau of Labor Statistics (BLS), the food at home index rose 8.4 percent over the last 12 months. The index for cereals and bakery products rose 13.6 percent over the 12 months ending in March. The remaining major grocery store food groups posted increases ranging from 2.5 percent (fruits and vegetables) to 11.3 percent (nonalcoholic beverages).

U.S. – Indo- Pacific

IPEF listening session set ahead of round three talks in May

  • The Department of Commerce and USTR announced two listening sessions ahead of the third round of IPEF talks in May. The first listening session will be hosted virtually by the two agencies on May 3. The second session will be held in-person on May 11 in Singapore.
  • The Commerce Department announced the third negotiating round of the Indo-Pacific Economic Framework (IPEF) will be held May 8 – 15 in Singapore. The agency outlined that the U.S. delegation for the third round will be “led by Sharon Yuan, Commerce Department Counselor and Chief Negotiator for Pillars II-IV, and Sarah Ellerman, IPEF Pillar I Chief Negotiator and Assistant United States Trade Representative for Southeast Asia and the Pacific (Acting).”
    • Recall that in late March, the Office of USTR recently released summaries of the tabled negotiating texts from the most recent IPEF round on Pillar I (Trade). The released text coincided with bipartisan frustrations expressed during the recent Congressional hearing on the President’s 2023 trade agenda.The Biden Administration has indicated ambitions to achieve “early harvests” on certain components of the IPEF text before an agreement on the entire Framework is reached. Several reports confirmed that the U.S. and other IPEF countries aim to finalize the deal during this calendar year.
    • IPEF negotiating countries besides the U.S. include Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam. Notably India opted out of negotiations on the trade pillar.

Ukraine

Ukrainian grain exports resume after temporary interruption

  • Ukrainian grain exports transiting through the Black Sea have resumed following a one-day interruption. According to a United Nations spokesman, Russia halted the inspection of ships containing Ukrainian grain last Tuesday. This move came amid demands from Russia to improve its ability to export fertilizer.
    • Recall that the Black Sea grain deal was set to expire on March 18th. While the deal was extended, it is unclear for how long. According to Ukraine’s infrastructure minister, the deal was extended for 120 days; however, Russia states that it agreed to a 60-day extension.

Trade Policy

CRS report examines Congress’ role in mini-trade deals

  • Congress should clarify its authority over limited trade agreements such as IPEF and the critical minerals agreement negotiated with Japan, and under discussion with the EU, the Congressional Research Service (CRS) noted in a recent report. CRS noted in the report, Critical Minerals: A U.S.-EU Free Trade Agreement?, the current critical minerals agreement discussions raise issues for lawmakers regarding WTO compliance and the role of Congress in any deal given the agreement will not mirror the broader provisions, such as tariff reductions, included in comprehensive free trade agreements (FTAs). CRS suggests Congress could clarify its role in less ambitious trade pacts such as the critical minerals agreement by specifying:
    • negotiating objectives for a traditional comprehensive FTA with the EU,
    • criteria for agreements to be considered FTAs generally or in the IRA, or
    • its role in shaping and approving targeted trade agreements.
  • CRS further noted that renewal of Trade Promotion Authority (TPA) “could be a vehicle for setting the criteria for trade agreements requiring Congressional approval.”
  • During last month’s Congressional hearings on President Biden’s trade agenda, a chorus of lawmakers in both chambers and both parties expressed frustration regarding USTR’s lack of consultation with Congress on trade policy. During the House hearing, Representative Jason Smith (R-MO), Chairman of the Ways and Means Committee, lamented the Biden Administration’s exclusion of Congress in trade policy endeavors. In opening remarks for the Committee’s hearing on the President’s Trade Agenda, Chairman Smith stated, “The Biden Administration unfortunately has refused to recognize that the Constitution requires Congress be at the center of U.S. trade policy. Through so-called “trade frameworks” that sidestep Congress and fail to establish durable agreements, this Administration is fueling the supply chain crisis and plunging American workers, farmers, and manufacturers into prolonged uncertainty. Endless dialogues and frameworks are no substitute for exercising Congress’s constitutional authority – and giving the American people a voice – over trade.”
  • Senate Finance Committee Chairman Ron Wyden (D-OR) called the lack of consultation with lawmakers “unacceptable.” “The Executive Branch has begun to embrace a “go it alone” trade policy. Let me be clear: Congress’ role in U.S. trade policy is defined by the Constitution. It’s right there in Article I, Section 8. That is black-letter law, and it’s unacceptable to suggest otherwise. It’s my expectation that Ambassador Tai and this Committee can begin to chart a new path forward when it comes to transparency, consultation, and ultimately, approval of trade agreements,” Wyden said in an opening statement.

USDA trade missions, tool for improving ag market access

  • USDA Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor is highlighting trade missions to expand U.S. agriculture exports. “How do we ensure our exporters – our farmers and ranchers and agribusinesses – have diverse markets to sell their products into?” Taylor was quoted in an Agri-Pulse Newsmakers event. “Our trade missions are one tool to support that work.” She emphasized that trade missions build long term relationships, not just short-term sales.
    • USDA has announced its next trade missions to the Netherlands (April 17-21), Japan (June 5-9), Chile, Malaysia and Angola. Last month Under Secretary Taylor led a trade mission to Panama – a $1 billion market for U.S. food and agriculture exports – to enhance U.S. food and agriculture products to the country.

Senators introduce Manufacturing Council legislation

Senator Tammy Baldwin (D-WI)
  • A bipartisan group of senators reintroduced legislation to create a National Manufacturing Advisory Council within the Commerce Department to “advise on how to support our Made in America economy and ensure the U.S. remains the top destination for manufacturing in the world.” according to a statement by Senator Tammy Baldwin (D-WI) reintroducing the legislation along with Senators Gary Peters (D-MI), Marco Rubio (R-FL), and Mike Braun (R-IN).
    • “I am excited to introduce this legislation with my Democratic and Republican colleagues to strengthen our Made in America economy, support our second-to-none manufacturing workforce, and strengthen our supply chains to lower costs for working families.” “Wisconsin has a long and proud tradition of making things and we need to make sure we are well positioned to continue our manufacturing legacy into the future,” said Senator Baldwin.
    • The council would be composed of manufacturers, labor representatives and academic experts and serve as a bridge between the manufacturing sector and federal government to improve communication. It would then “advise Congress annually on how to ensure the U.S. remains a top destination globally for investment in manufacturing by providing lawmakers with a national strategic plan – including recommendations to address workforce issues, supply chain interruptions, other logistical and emerging challenges.”
  • The Advisory Council would also be required to:
    • Identify and assess the impacts of technological developments, production capacity, skill availability, investment patterns, and emerging defense needs on the manufacturing competitiveness of the United States.
    • Solicit input from the public and private sectors as well as academia on emerging trends in manufacturing.
    • Provide recommendations to the Secretary regarding global and domestic manufacturing trends threatening the U.S. manufacturing sector, including supply chain interruptions, logistical challenges, and technological changes. The Advisory Council would also advise the Secretary on areas to increase federal attention with respect to manufacturing – as well as matters relating to the U.S. manufacturing workforce such as the impact of burgeoning technology and worker training and education priorities.

USDA

Secretary Vilsack announces key political appointment

  • Last week USDA announced the appointment of Jamal Habibi to Chief of Staff for Trade and Foreign Agricultural Affairs. According to the USDA press release, “Most recently, Habibi served as Chief of Staff for Rural Housing Service since February 2021. As Chief of Staff, Habibi supported American Rescue Plan Act (ARPA) implementation efforts and collaborated with the White House and various federal agencies to develop USDA commitments that boost new housing supply and provide greater protections for tenants in rural communities. Before his appointment at USDA, Habibi was a Senior Associate at the Opportunity Finance Network. During the Obama Administration, Habibi served as Outreach Director at the Department of Treasury and as a Special Assistant at USDA. Habibi holds a bachelor’s degree from the University of Wisconsin in Madison.”

WTO

U.S. signs WTO Fisheries Agreement

  • On April 11, the U.S. became the 4th WTO member to submit acceptance of the Agreement on Fisheries Subsidies. Ambassador Katherine Tai presented the instrument of acceptance to WTO Director-General (DG) Ngozi Okonjo-Iweala in Washington, D.C.
    • Both leaders lauded the event and progress on the Agreement. Director General Okonjo-Iweala said: “I am delighted and grateful to receive the United States’ formal acceptance of the WTO’s Agreement on Fisheries Subsidies. This strong show of support by the United States for the WTO’s work toward ocean sustainability marks a pivotal increase in momentum among the membership to ensure this landmark agreement enters into force. US leadership is vital to the WTO and to multilateralism. I look forward to continuing to work with the United States to ensure that the WTO responds to the needs of people and the planet,” according to a WTO readout.
    • United States Trade Representative Katherine Tai said: “The United States has been a leader in protecting our shared environment from harmful and unsustainable practices, including our oceans and marine resources — and those whose livelihoods depend on them.”
    • “We are proud to be among the first WTO members to accept this agreement, which is the first ever multilateral trade agreement with environmental sustainability at its core. It will help improve the lives of fishers and workers here in the United States and elsewhere, and we look forward to building on this agreement with other WTO members,” Ambassador Tai said.
U.S. Trade Representative Ambassador Katherine Tai and WTO Director-General Ngozi Okonjo-Iweala
  • The Agreement was concluded at last year’s 12th Ministerial after nearly 20 years of negotiations. Switzerland, followed by Singapore were the first WTO member countries to formally sign the agreement earlier this year.
    • The Office of USTR noted that “The Agreement contains several important disciplines, including prohibitions on subsidies to vessels or operators engaged in illegal, unreported, and unregulated (IUU) fishing; for fishing regarding overfished stocks; and for fishing on the unregulated high seas. The Agreement also includes robust transparency requirements aimed at strengthening WTO Members’ notifications of fisheries subsidies and enabling effective surveillance of the implementation of the obligations in the Agreement.”

WTO leader sets expectation for 13th Ministerial

  • WTO Director-General Okonjo-Iweala urged members to approach the 13th ministerial (MC13) next February with realistic and workable expectations, to build on momentum on outcomes from prior ministerial. Speaking at an event hosted by the Washington International Trade Association, Okonjo-Iweala highlighted several top MC13 goals, including resolving the temporary moratorium on electronic commerce, continued advancement of curtailing fisheries subsidies, making progress on WTO reform, and agriculture reform and food security, among others.
    • Regarding food security and agriculture negotiations, the U.S. continues to play an important role in outlining key areas of discussion and positions. The U.S. recently filed a 3-page communications for circulation among WTO members outlining objectives to address food security, agricultural supply chains, sustaining agriculture productivity growth, climate change resiliency, and long-term agriculture sustainability.
    • In an event hosted by American University, Okonjo-Iweala touched on WTO dispute settlement reform efforts. While reforming the dispute settlement system is a priority, she acknowledged uncertainty regarding what reform will look like. She highlighted the importance of successful reform for maintaining credibility and legitimacy, stating “I believe that as long as we don’t deliver a reform of the dispute settlement system, we’ll continue to hear about a hobbled and non-functional WTO even while so many aspects of the organization are working well.”