TRADE UPDATE

Food & Agriculture
Jan. 14, 2025

By Kristy Goodfellow, Vice President of Trade and Industry Affairs

SUBSCRIBE

HIGHLIGHTS

  • Supply Chains: The Office of the U.S. Trade Representative released a series of six papers advocating for a “new direction” in trade policy that promotes supply chain resilience.
  • US Government: The Department of Agriculture and USTR announced appointees to seven agricultural trade advisory committees.
  • WTO: A WTO dispute panel largely found in favor of the EU in a case brought by Indonesia in 2019 challenging EU measures concerning biofuels produced using palm oil.
  • US-China: In Washington, the Treasury Department published a notice of intent to propose regulations on the section 45Z credit which will prevent used cooking oil (UCO), including significant volumes from China, from qualifying for clean fuels production credits. That status would remain in effect until the Treasury Department and IRS consider appropriate substantiation and recordkeeping requirements.
  • Transportation: On Jan. 8, the International Longshoremen’s Association (ILA) and U.S. Maritime Alliance (USMX) reached a tentative agreement on a new six-year Master Contract, averting another port strike seven days before it was expected.

“To advance supply chain resilience, we must and we will traverse new ground in trade and investment policy.”

—-U.S. Trade Representative Katherine Tai in “Adapting Trade Policy for Supply Chain Resilience”

Supply Chains

USTR RELEASED POLICY PAPERS ON TRADE AND SUPPLY CHAINS

  • USTR released “Adapting Trade Policy for Supply Chain Resilience: Responding to Today’s Global Economic Challenges,” a series of six policy papers.
  • Throughout the papers, USTR advocates for a “new direction” in trade policy that promotes supply chain resilience.
    • “Because the promotion of supply chain resilience has not historically been an express objective of U.S. trade policy, it is now necessary to navigate this inflection point with deliberate care and thoughtful policy innovation,” USTR said.
  • The paper “Reshaping the Global Trade Paradigm” identifies four dimensions of resilience: sustainability, security, diversity, and transparency.
  • Another paper recommends a new model of sectorial trade agreements, suggesting it “can provide a framework for trade cooperation that promotes supply chain resilience.”
  • Regarding non-market policies and practices, the report advocates for domestic action (such as investments in critical sectors and tariffs) and working with willing allies, including through coordinated tariffs, standards, and investments.

US Government

USDA AND USTR ANNOUNCE APPOINTEES TO ADVISORY COMMITTEES

  • USDA and USTR recently announced appointees to seven agricultural trade advisory committees.
  • Twelve members were appointed – or reappointed, in some cases – to the Agricultural Policy Advisory Committee (APAC), which is comprised of senior representatives from the U.S. agricultural community who advise USDA and USTR on trade policy matters.
  • Forty-one members were named to the Agricultural Technical Advisory Committees, which offer input and guidance from the perspective of their respective product sectors.

WORLD TRADE ORGANIZATION

DISPUTE PANEL REPORT ON EU PALM OIL BIOFUELS

  • A WTO dispute panel report was made public on Jan. 10 in a case brought by Indonesia in 2019 against the EU on its measures concerning biofuels produced using palm oil.
  • According to the EU, the “WTO upheld the EU’s ability to take environmental and climate-based action under the Renewable Energy Directive (RED II)” and a related measure in France. 
  • The EU also acknowledged that “certain aspects of the implementation and design of the EU Delegation Act under the Directive were inconsistent with WTO rules” and states that it intends to make the necessary adjustments to the Act to come into compliance.
  • RED II classified biofuels made from crops associated with high levels of deforestation, including palm oil, as unsustainable. Indonesia argued that the policy discriminated against palm oil in favor of other biofuels that are primarily produced in Europe.
  • A separate WTO dispute panel had similar findings in a case Malaysia took against the EU on palm oil in biofuels. That report was released on March 5, 2024.

US-China

USED COOKING OIL ELIGIBILITY FOR CLEAN FUELS PRODUCTION CREDITS

  • In Washington, the Treasury Department published a notice of intent to propose regulations on the section 45Z credit which will prevent used cooking oil (UCO) from qualifying for clean fuels production credits. The prohibition would remain in place until the Treasury Department and IRS consider appropriate substantiation and recordkeeping requirements.
  • Both U.S. industry and Congressional representatives have expressed concern about the drastic increase in U.S. imports of UCO, much of which is speculated to be fraudulent.
  • USDA published a report in 2024 on U.S. renewable diesel production and growth and the impact on global feedstock trade. Within the report, USDA noted UCO imports tripled in 2023, driven by imports from China.
  • The Treasury notice specifically cites concerns about “improper identification of a substance” and the “uncertainty of market impacts caused by incentivizing UCO.” The language uses virgin palm oil as an example that could be mislabeled, leading to the potential for increased demand for a product with a different emissions profile than UCO.
  • “[T]he Treasury Department and the IRS are considering appropriate substantiation and recordkeeping requirements for imported UCO. As a result, pathways that use imported UCO will not be available in the 45ZCF-GREET model until the Treasury Department and the IRS publish further guidance,” the notice specified.

Transportation

PORT STRIKE AVERTED

  • On Jan. 8, the International Longshoremen’s Association (ILA) and U.S. Maritime Alliance (USMX) reached a tentative agreement on a new six-year Master Contract, averting another port strike seven days before it was expected.
  • In a joint press statement, ILA and USMX said the new agreement “protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports – making them safer and more efficient, and creating the capacity they need to keep our supply chains strong.”
  • Details of the agreement will be released when members of ILA and USMX have reviewed and approved the final document.