TRADE UPDATE

Food & Agriculture
June 14, 2022

By Michael Anderson, Vice President of Trade and Industry Affairs

SUBSCRIBE

HIGHLIGHTS

  • USMCA: The U.S. announced a fourth labor consultation with Mexico under the USMCA’s rapid response labor mechanism concerning worker rights at auto parts plant facility in Frontera, Coahuila, which is owned by global carmaker Stellantis.
  • Biden Nominee: President Biden will nominate Doug McKalip, a long-time USDA civil servant, to serve as chief agricultural negotiator at the Office of the U.S. Trade Representative (USTR), following months of concern from several lawmakers to move swiftly after the prior nominee, Elaine Trevino withdrew from consideration.
  • Indo-Pacific Economic Framework: USTR Katherine Tai confirmed that by summer there is likely to be “a more formalized convening” concerning IPEF and reiterated that IPEF extends beyond just trade and lauded the ambitions of the U.S. in developing enforcement mechanisms under IPEF.
  • U.S. – Taiwan: The U.S. and Taiwan will pursue a new trade deal, similar to IPEF, in which Taiwan is not participating. The U.S.-Taiwan Initiative on 21st-Century Trade aims to “develop an ambitious roadmap for negotiations” in areas such as trade facilitation, regulatory practices, agriculture, anti-corruption, and supporting small businesses.
  • WTO: Kicking off the WTO’s 12th Ministerial Conference (MC12), Director-General Ngozi Okonjo-Iweala outlined her agenda for the conference, called “four pillars-plus.” The four pillars – identified as the priorities – are the fisheries subsidies negotiations, the agriculture talks, a pandemic package that will include the decision on the TRIPS waiver, and WTO reform.

“The multilateral trading system is a global public good that we have collectively and carefully built up over 75 years. Though certainly not perfect, by historical standards it has delivered more prosperity to more people than every international economic order that came before it. “…this is the time to invest in it, not to retreat from it. This is the time to summon the much-needed political will to show that the WTO can be part of the solution to the multiple crises of the global commons we face.”

— Director- General Ngozi Okonjo-Iweala, MC12 opening statement

USMCA

U.S. asks Mexico for another review of labor conditions

  • The U.S. announced a fourth labor consultation with Mexico under the USMCA’s rapid response labor mechanism. The U.S. asked Mexico last week to review whether workers at another auto parts plant facility are being denied rights. The facility is located in Frontera, Coahuila and is owned by global carmaker Stellantis. The request was sent when it was found that there was “sufficient credible evidence of a denial of rights enabling the good faith invocation of enforcement mechanisms” after the Interagency Labor Committee for Monitoring and Enforcement (ILC) received a petition that workers were being denied the right of free association and collective bargaining.
    • USTR has directed the Treasury Department to suspend the sale of all unsold entries of goods from the plant until the USTR can notify otherwise.
    • Mexico has 10 days from June 6th to say if a review will be conducted and 45 days from that date to complete it.
  • Mexico recently agreed to investigate the labor allegations in the third USMCA labor complaint at a Panasonic auto parts plant in Reynosa, Tamaulipas. In a statement Mexico said the government would “review the case to determine whether or not there is a denial of labor rights in accordance with the provisions” of USMCA. Mexico has 45 days from the USTR request filing to report the findings of its review to the U.S. The alleged labor violations come from a petition from the Mexican union SNITIS stating that the facility denied workers the right to free association and collective bargaining.
    • If Mexico finds that there was a denial of rights, the two parties would enter talks on remediation. If not, the U.S. could request a USMCA panel to review the case.

U.S. – China

No new tariffs on solar imports amid AD/CVD evasion probes

  • President Biden invoked emergency powers granted in a provision in the Tariff Act of 1930 early last week to “create a 24-month bridge” for solar panels and cells from Cambodia, Malaysia, Thailand, and Vietnam to be imported “free of certain duties” for the purpose of ensuring the U.S. “has access to a sufficient supply of solar modules to meet electricity generation needs while domestic manufacturing scales up.” The Commerce Department (DOC) is currently investigating if companies based in the same four Southeast Asian countries have circumvented tariffs on Chinese shipments of solar equipment to the U.S., a probe that started earlier this year. The probe has since been met with both approval and criticism based on its effects on the solar power industry.
    • Sen. Jacky Rosen (D-NV) applauded the action and stated that “the risk of additional tariffs on imported solar panels would have been devastating for American solar projects, the hundreds of thousands of jobs they support, and our nation’s clean energy and climate goals.”
    • In contrast, Senate Finance Committee Chair Ron Wyden (D-OR) announced that he has “significant concerns about gifting Chinese producers – wherever they’re located – a two-year delay in penalties, instead of holding them accountable for their trade cheating that kills prospects for American manufacturing.”
    • The emergency, cited to invoke the provision in the Tariff Act of 1930, is the threat that Russia’s invasion of Ukraine and extreme weather events have posed to the reliability of the U.S.’ electric power system, which the White House deems as critical to national security.
    • Biden has also authorized use of the Defense Production Act to expand American manufacturing of solar panel parts, which are mainly sourced from the four countries mentioned.

Agriculture Exports

U.S. agriculture exports support over 1 million jobs

  • U.S. agricultural exports supported the equivalent of more than 1.13 million jobs (2020), according to analysis released by USDA’s Economic Research Service (ERS). ERS noted that the “benefits of U.S. ag exports to the American economy far exceed the value of shipments alone.”  The economic scope covered production, processing, storage, transportation, and marketing of farm and food products headed for the export market support which all a large number of jobs throughout the U.S.  Other highlights of the economic impact of agriculture exports include:
  • With U.S. agriculture exports valued at more than $150 billion in 2020, every $1 billion in exports creates 7,550 jobs. Farm activities generated by U.S. exports – mainly crop and livestock production – supported a total of 439,500 jobs. Those jobs included labor provided by farm operators and their family members, hired farmworkers, and contract workers.
  • Off the farm, exports supported 423,900 total jobs in the services, trade, and transportation industries. Food processing activities created 162,000 jobs, while other manufacturing activities like canning, packaging, and bottling provided 107,000 jobs.

COVID-19

Slowing China imports help narrow trade deficit

  • The April U.S. goods and services deficit fell sharply, from $107.7 billion to $87.1 billion in April, due in  part to lower imports, which posted the first month-on-month decline since July 2021, as according the Commerce Department. The decline reflected a drop in the value of imports amid Covid lockdowns in China that outweighed stronger exports. The trade deficit with China decreased in April by $8.5 billion as imports fell by the most since 2015. 
    • The April decrease in the goods and services deficit reflected a decrease in the goods deficit of $19.1 billion to $107.7 billion and an increase in the services surplus of $1.5 billion to $20.7 billion. Year-to-date, the goods and services deficit increased $107.9 billion, or 41.1 percent, from the same period in 2021. Exports increased $151.3 billion or 18.8 percent. Imports increased $259.2 billion or 24.3 percent.

Supply Chains

House voting on ocean shipping reform

  • The House is set to vote this week on a Senate-passed bill to reform maritime shipping laws in order to relieve supply chain bottlenecks and crackdown on ocean carriers. The Ocean Shipping Reform Act (OSRA) is aimed at boosting U.S. agricultural exporters’ access to cargo containers to export their products. The bill grants the Federal Maritime Commission significantly more authority for extensive rulemaking and potential crackdowns, rewriting ocean shipping law for the first time since 1998.
    • OSRA is expected to pass the House by a wide margin. Rep. Dusty Johnson (R-SD) said “House members feel like the House version is stronger, but we don’t want to let perfect be the enemy of the good – we clearly need some real relief applied to the supply chain crunch sooner rather than later.”

Global supply chains pressures ease

  • The Global Supply Chain Pressure Index fell to 2.9 last month from 3.4 in April, Federal Reserve Bank of New York reported. The May index suggests possible stabilization of historically high supply chain constraints. The index peaked in December at 4.4 yet remains at historically high levels. The gauge is comprised of 27 variables ranging from cross-border transportation costs to country-level manufacturing data in the euro area, China, Japan, South Korea, Taiwan, the UK and the U.S.

Food Security

U.S. food prices climb again in May

  • U.S. retail food prices increased 1.4% in May, led by rising costs for dairy products, and have risen 11.9% over the past 12 months, according to the latest Consumer Price Index. Though lower surging energy prices, the steadily rising cost of food products contributed to an overall (seasonally adjusted) increase in the CPI of 1.0%.
    • According to the Bureau of Labor Statistics, the “index for food at home rose 1.4 percent in May, the fifth consecutive increase of at least 1.0 percent. All six major grocery store food group indexes rose in May. The index for dairy and related products rose 2.9 percent, its largest monthly increase since July 2007. The index for nonalcoholic beverages increased 1.7 percent, and the index for other food at home rose 1.6 percent.”

Biden Transition

Biden will nominate McKalip to USDA trade position

Doug McKalip, nominee for USTR Chief Agricultural Negotiator
  • President Biden announced his intent to nominate Doug McKalip to serve as chief agricultural negotiator at USTR, following months of concern from several lawmakers to move swiftly after the prior nominee, Elaine Trevino, withdrew from consideration. McKalip has held various positions over nearly 30 years in federal service as an “agriculture policy leader and trade expert.” 
  • McKalip presently serves as a senior adviser to Agriculture Secretary Tom Vilsack. Previously he served in the Obama administration both as an aide to Vilsack and acting chief of staff and as senior adviser for agriculture and rural affairs at the White House Domestic Policy Council. He served as director of the White House Rural Council and coordinated the executive branch-wide response to the 2012-2013 drought. McKalip has served in a variety of other roles at USDA, including as confidential assistant to the secretary, and director of legislative and public affairs for the National Resources Conservation Service.

Summit of the Americas

Biden’s economic proposal for Latin America similar to IPEF

  • The Americas Partnership for Economic Prosperity, the economic proposal President Biden unveiled at the Summit of the Americas, includes five pillars: reforms at the Inter-American Development Bank, creating resilient supply chains, updating the “social contract” between governments and their people, adoption of clean energy and sustainable agricultural practices, and finally, “sustainable and inclusive trade.” The plan is to deepen economic ties in Latin America without pursuing any new free trade deals. The Biden administration will spend the summer recruiting countries in the Western Hemisphere to join negotiations when, similar to IPEF, countries will then choose which pillars to participate in. The agenda has a lack of classic market-access provisions.
    • Jake Colvin, the National Foreign Trade Council President, stated that the proposal is an opportunity for “economic partners to hit the ground running” and using existing FTAs as “a starting point for deeper economic integration and concrete commitments.”
    • Executive director of the Citizens Trade Campaign, Arthur Stamoulis, noted that “whether the Americas Partnership for Economic Prosperity ends up benefiting working people or just raking in more profits for big corporations will be determined by the negotiating objectives that the administration prioritizes, the countries involved, and the negotiating process.” 

Latin American countries agree to “good regulatory practices”

  • Amid the Summit of the Americas, 14 countries have signed the Declaration of Good Regulatory Practices which will help support and facilitate fair trade in the hemisphere. According to USTR, “good regulatory practices are fundamental to transparent governance and fair trade, they promote development of better regulations, prevent and reduce non-tariff barriers, and support compliance with international trade obligations.” The countries that have signed on will “adopt or maintain laws, decrees, regulations, guidance, and other policies to ensure central government agencies use good regulatory practices.”
    • The countries that have signed the agreement are Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Haiti, Panama, Paraguay, the United States, and Uruguay.

Indo- Pacific Economic Framework

USTR Tai elaborates on IPEF elements

  • U.S. Trade Representative Tai acknowledged last week in a dialogue hosted by the Washington International Trade Association (WITA) that by summer there is likely to be “a more formalized convening” regarding IPEF with the hopes of being able “to deliver along the way, as opposed to holding everything together until everything comes together at the end.” The ambassador reiterated that IPEF goes beyond a traditional trade pact and is a holistic economic approach where “trade is an important part but not the only part.” When asked for priorities in the trade pillar, USTR Tai stated that she “doesn’t want to put [her] thumb on the scale before we have brought our trading partners to the table.”
    • Traditional enforcement mechanisms will still have a place, according to USTR Tai, and that during negotiations “there will be concessions and commitments that we make to each other” and that “those, if they make sense, can be suspended through a traditional dispute settlement mechanism.” The administration is actively thinking and already trying new ways, such as in the U.S.-Peru FTA, of holding the participants accountable to ensure integrity in an agreement.
    • Ambassador Tai noted that “with this next generation of trade engagement” the administration’s approach is to focus on an incentive structure that brings confidence back to the global economy. “Incentives can be created through sticks but also with carrots,” stated Tai.
    • In addition, USTR Tai highlighted the fact that tariffs cuts remain unlikely and instead there will be an effort to identify tools that will boost supply chain resilience. As it was stated in the conversation, the average bound MFN rate for the U.S. is 2.3%, and because of that “there is not a lot for us to further give” in this realm.

U.S. – Taiwan

U.S. and Taiwan to start a trade pact

  • New talks between the two nations opened regarding facilitating trade but without reducing tariffs. The U.S.-Taiwan Initiative on 21st-Century Trade aims to “develop an ambitious roadmap for negotiations” in areas such as trade facilitation, regulatory practices, agriculture, anti-corruption, and supporting small businesses. Taiwan was not included in IPEF during its launch for fears of China’s opposition, according to most observers. The interactions are all unofficial and the initiative does not require approval from Congress because it does not address market-access issues (i.e., tariff barriers). According to senior officials, the trade initiative would work cooperatively with three of the IPEF pillars. “In the days and weeks ahead, we will move quickly to develop a roadmap for possible negotiations, followed by in-person meetings in Washington, DC, next month,” said a senior official.
    • This initiative is expected to be “more robust and broader” than the U.S.-Taiwan Trade and Investment Framework Agreement (TIFA), referencing the fact that the first TIFA talks were held last year since 2016.
    • USTR said the U.S. and Taiwan “intend to explore provisions to facilitate agricultural trade through science and risk-based decision making and through the adoption of sound, transparent regulatory practices.” Taiwan became the sixth largest foreign market for U.S. agriculture commodities despite the high average Taiwanese tariff of 15.1% for these commodities, according to the USDA’s Foreign Agriculture Service.
    • In a statement by the U.S.-Taiwan Business Council President Rupert Hammond-Chambers, he said “this should be in concert with IPEF, if it’s not, then we should all be concerned about whether this is a press release or substantive.”
    • Liu Pengyu, the spokesperson for the Chinese Embassy in the U.S., said that Beijing “opposes all forms of official interactions in any name or form” between Taiwan and other countries.

USTR asks for comments on Taiwan

  • The USTR issued a notice last Tuesday calling for comments on the priorities the U.S. and Taiwan have established for the new U.S.-Taiwan Initiative on 21st-Century Trade. The request for public comments is “on matters relevant to the specified trade areas, including U.S. interests and priorities, in order to develop negotiating objectives and positions.” Having opened talks on the initiative on June 1st, the two nations aim to “develop an ambitious roadmap for negotiations” in areas such as trade facilitation, regulatory practices, agriculture, anti-corruption, and supporting small businesses.
    • Other areas that can be commented on are harnessing the benefits of digital trade, promoting worker-centric trade, supporting the environment and climate action, standards, state-owned enterprises, and non-market policies and practices.
    • The deadline for the submission of written comments is July 8th.

Ukraine

No deal to unblock Black Sea ports

  • In a round of talks between Turkey and Russia, no agreement has been reached to allow the safe passage of Ukraine’s grain ships on the Black Sea. Russia and Turkey voiced support for a proposal for a safe corridor in the Black Sea, but Ukraine rejected it due to questioning its credibility. Russia demanded Ukraine remove mines from the Black Sea for the safe passage, but Ukraine is concerned Russia would use its naval advantage to attack at Odesa. Russia has previously stated that that it was willing to open humanitarian corridors in the Black Sea for Ukrainian ships carrying grain but that the “removal of sanctions” on Russian exports and financial restrictions must be lifted first. Ukraine’s Black Sea ports have been blocked since Russia launched its war in Ukraine in February.
    • Olha Stefanishyna, Ukraine’s deputy prime minister for European and Euro-Atlantic integration, said “We cannot be in a situation where we will sign some paper and then open our sea to the full navy aggression of Russian Federation to our ports.” Either the “UN or individual countries” should provide those security guarantees through patrolling and monitoring, she noted.

U.S. and several WTO members show solidarity for Ukraine

Taras Kachka, Ukrainian Trade Minister
  • The U.S. and more than 50 WTO members issued a joint statement expressing solidarity with Ukraine and vowing to support Ukraine in its economic recovering, including harvesting and exporting agricultural products. The statement was announced at the WTO’s 12th Ministerial (MC12) and was one of the first actions in Geneva in opening MC12. In the statement the signatories noted that the war in Ukraine is “having a devastating impact, including on Ukraine’s economy and ability to trade,” and the “destruction of a significant part of Ukraine’s transportation infrastructure, including roads, bridges, ports and railroads, is substantially impeding Ukraine’s ability to produce, export, and import.” The letter continued, “We are gravely concerned about the consequences of this destruction for Ukraine and for global trade, in particular as regards the supply to international markets of a number of key commodities produced by Ukraine, including agricultural and food products, fertilizers, sunflower oil, and critical minerals. We are also deeply concerned by numerous reports of grain being plundered from Ukraine. These actions are at odds with the principles and values of the WTO.” 
    • Taras Kachka, Ukrainian Deputy Minister and Trade Representative expressed that the “first big event before the formal opening of the ministerial conference is solidarity with Ukraine.” “What we see is that, in reality, the trade universe cannot actually be ambivalent about what’s going on in the world,” he added. “War against Ukraine is not only ruining the Ukrainian economy and killing thousands of people, but as well is a danger to all the world because Russia is playing hunger games against the world, blocking Ukrainian sea ports and threatening with hunger a big number of developing nations.” 

Section 301 Tariffs

Legislation invokes review of tariffs impact on inflation

Congresswoman Stephanie Murphy (D-FL)
  • Representative Stephanie Murphy (D-Fl) introduced legislation, Repeal Tariffs to Reduce Inflation Act of 2022, that would require the Treasury Department – in coordination with USTR and the U.S. International Trade Commission – to prepare the report within 60 days and to submit it to the House Ways and Means and Senate Finance Committees. “My bill requires the federal government to assess whether US tariffs imposed on a wide range of imported products are a factor contributing to elevated inflation,” Murphy, a member of the House Ways and Means Committee said. “If the answer is yes, as both common sense and basic economics strongly suggest, the federal government should act to repeal or reduce those tariffs in order to provide price relief to the American public.”  
  • The bill requires the report to estimate the inflationary impact of the following, both individually and in the aggregate:
    • U.S. tariffs imposed on a wide array of imported products from China pursuant to Section 301 of the Trade Act of 1974. “These tariffs have done little to change China’s abusive trade practices, but have significantly harmed US households and businesses,” according to Ms. Murphy.
    • U.S. tariffs imposed on aluminum and steel imports from many countries pursuant to Section 232 of the Trade Expansion Act of 1962. 
    • U.S. tariffs imposed on imported items like solar panels and washing machines pursuant to Section 201 of the Trade Act of 1974.
    • The expiration, at the end of 2020, of the Generalized System of Preferences, which waives US tariffs on certain imports from more than 110 lower-income countries to encourage economic development through increased trade with the United States.

WTO

Okonjo-Iweala’s agenda for MC12

  • Director-General Ngozi Okonjo-Iweala outlined her agenda for the MC12 and called “four pillars-plus.” The four pillars – identified as the priorities – are the fisheries subsidies negotiations, the agriculture talks, a pandemic package that will include the decision on the TRIPS waiver, and WTO reform. The “plus” of the agenda are other development and least-developed country issues. Speaking at a pre-MC12 General Council meeting last Tuesday, Okonjo-Iweala stated, “Many gaps remain but we are making progress. Let us keep on the pressure, let us keep up the work at this critical juncture.” She added, “We need to use each hour effectively to close as many gaps as possible. The success of this whole endeavor is in our hands. Let us deliver.”
Gloria Abraham Peralta, WTO Ambassador (Costa Rica)

Agriculture package to be decided

  • Focused on delivering an outcome on agriculture at MC12, members are in the final stages in deciding if the three draft documents focused on agricultural reform, food security, and the UN’s World Food Program (WFP) are an acceptable package. The three texts were introduced by Costa Rican Ambassador to the WTO Gloria Abraham Peralta as a result of informal talks with a small group of members. Countries like the U.S., EU, China, Japan, Korea, Nigeria, Turkey, and Egypt showed support for the drafts. Countries like Ukraine, Thailand, Paraguay, India, and Indonesia, as well as the African Group do not feel that their concerns were addressed. Okonjo-Iweala said of the situation, “I could not overemphasize the importance of these texts, particularly in the context of the current global food crisis.”
    • Agricultural reform: The first draft has outlined broad objectives for the topics under agriculture negotiations with a commitment to achieve some of the outcomes listed by the next Ministerial Conference. The topics are domestic support, market access, public stockholding, and the special safeguard mechanism. It highlights that trade, along with domestic production, contributes to improving global food security.
    • Food security: The second draft is designed to keep agricultural trade flowing, urging countries to refrain from imposing export restrictions on agricultural products.
    • WFP exemption: The third text calls on countries to exempt the UN’s humanitarian food program from trade restrictions. To accommodate members that have reservations about this draft, a sentence has been added that ensures the country from which WFP is purchasing from can protect its own food security.

“Significant progress” for fishing subsidy negotiations

  • For two decades, the WTO has been attempting to reach a deal with the global community that would curb billions of dollars of subsidies that encourage overfishing and threaten this key food supply in the long-term. With the deal hoping to be secured by MC12, Santiago Wills, Colombian Ambassador to the WTO and chair of the negotiations, stated, “I’m happy to report that some significant progress has been made.” The biggest divergences were on artisanal fishing, where some members wanted 12 nautical miles to be the limit for subsidies for small-scale fishers while others, specifically India, preferred 200 nautical miles and how long members would have to eliminate harmful subsidies, with the broad consensus being between 5 to 7 years, but India pushing for a 25-year transition period. A notification requirement has been agreed upon regarding the use of forced labor in the industry, an issue that was politically sensitive for China. Members widely agree on prohibiting three categories of harmful subsidies in fishing:
    • Subsidies that contribute to illegal, unreported, and unregulated fishing;
    • Subsidies for the fishing of an overfished stock; and
    • Subsidies that contribute to overcapacity or overfishing, such as for upgrading vessels, reducing cost of fuel, reducing labor costs, and propping up prices paid for fish.

“Cautiously optimistic” tone on TRIPS waiver

  • Ambassador Lansana Gberie of Sierra Leone, chair of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS), said, “I’m feeling cautiously optimistic now that we will get this text ready for adoption by ministers in time for the coming week,” after entering into “real negotiation mode” early last week. Discussions on the TRIPS COVID-19 document issued by WTO Director-General Ngozi Okonjo-Iweala was mired in debate on language revisions sought by developing countries and concerns with reciprocity in the deliberations. Several developing countries expressed concern with the chair’s refusal to include their suggestions into the negotiating text, according to reports.  WTO Deputy Director-General Anabel Gonzalez said of the concrete impact of the waiver would be “basically a document that would allow governments to authorize a company to use the subject matter of a patent, under certain circumstances.”
    • Last month WTO Director-General Okonjo-Iweala released the TRIPS waiver compromise regarding COVID-19 vaccine IP protections agreed upon by the Quad (the EU, India, South Africa, and the U.S.). A WTO news item on the release notes, “In their discussions, the Quad adopted a problem-solving approach aimed at identifying practical ways of clarifying, streamlining and simplifying how governments can override patent rights, under certain conditions, to enable diversification of production of COVID-19 vaccines.” The text allows eligible members to grant usage of patented COVID-19 vaccine IP without the consent of the patent holder.
    • The TRIPS waiver is part of the WTO’s larger response to the pandemic to be agreed on at MC12. Facilitator of the pandemic response is Ambassador Dacio Castillo of Honduras who said that while delegations are working with “clean” texts, “nothing is agreed until everything is agreed.”

Difficulty with WTO reform

  • With the start of MC12 this week, the Director-General has indicated that progress on negotiations for WTO reform has been made. She says, “it is our collective responsibility, including at the highest level, to ensure that the WTO functions effectively to respond to all members’ needs and contributes to addressing the most pressing issues in the world.” Broad consensus on the reform includes emphasizing that reform for the WTO is needed and that the process is open, transparent, and inclusive of the interests of all members. The Deputy Director-General stated that countries are moving towards more small-group plurilateral talks and that this trend “can be complementary to the multilateral trading agreements,” and she thinks, “they would have a big role in the future in an organization that has 164 members with different interests and priorities,” so in that sense “reform… has already started.”
    • During an informal General Council meeting, there were two significant different positions on outlining the process of reform. Members like the U.S., the EU, Canada, and other developed countries, although also including some developing nations, support a streamlined language on reform that does not “prejudge” the outcome of reform discussions. The other position is composed of India, South Africa, and their allies where they argue in favor of a prescriptive text that highlights development, “policy space,” and existing rights in the language.
    • India states that it wants the language to be “consistent with the principles and objectives of the multilateral trading system as set out in the Marrakesh Agreement Establishing the World Trade Organization” which founded the organization in 1995. The U.S. and others state that this framework would prioritize specific issues which would narrow the options and scope for reform.
    • In contrast, the WTO dispute settlement language is largely agreed to in the outcome document. The document reads, “We acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by MC13.”

U.S. and EU agree with Brazil on annual MC meetings

  • Brazil formally proposed that the ministerial conferences shift to an annual schedule rather than every two years, beginning in 2023. A handful of delegations responded positively to the idea, most notably the U.S. and the EU. The U.S. largely agreed and added that doing so lets trade ministers meet more often and could help “lower the profile” of each ministerial. Meanwhile, the EU supported the idea in principle, but members should first think about any potential implications for how the WTO conducts its work.
    • Due to pandemic disruptions, it has been more than four years since the last ministerial conference was held in Buenos Aires. The rationale for this suggestion is “not necessarily to make decisions or deliver on big packages, but rather to exchange views on world trade and the multilateral trading system, debate short and long-term issues and solutions, and provide complex ongoing negotiations, with guidance and political drive.”

Ag Economy Barometer

The Ag Economy Barometer plummets

  • The May Ag Economy Barometer plummeted 22 points to an index reading of 99, the lowest level since April 2020, during the global pandemic.  The May 2022 barometer reading marked just the 9th time since data collection began in fall 2015 that the overall measure of farmer sentiment fell below 100. Supply chain issues, rising input cost for farming operations, and increasing concerns on financial operations for farmers continue to drive farmer sentiment lower the past several months.
    • Regarding rising input prices,  44% of respondent cited  costs pressures as the leading concern for farming operation in the upcoming year. Nearly 6 out of 10 (57%) producers said they expect prices paid for farm inputs in 2022 to rise 30% or more compared to prices paid in 2021.