TRADE UPDATE

Food & Agriculture
October 24, 2023

By Michael Anderson, Anderson Global Trade, LLC

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HIGHLIGHTS

  • USMCA: Panelists to review the USMCA dispute on Mexico’s biotech policies on GM corn were named last week, according to Politico reporting. Christian Häberli, Hugo Perezcano Díaz, and Jean Kalicki will serve on the panel according to a filing with the USMCA Secretariat.
  • Supply Chains: Several House lawmakers sent a letter to U.S. Customs and Border Patrol urging the agency to “utilize every tool possible to pursue a more comprehensive [Uyghur Forced Labor Prevention Act] enforcement strategy to keep products tainted by forced labor out of the supply chains of goods imported into the U.S.”
  • Trade Policy: The Office of the USTR and the Department of Agriculture (USDA) are moving to create an advisory committee on seasonal and perishable produce. They are soliciting applications via the Federal Register notice.
  • Trade Remedy: Over 60 agriculture and farm groups sent a letter to Commerce Secretary Gina Raimondo requesting the agency “consider the impact of phosphate duties” on Moroccan imports as Commerce reconsiders import duties as remanded recently by the U.S. Court of International Trade (CIT).
  • WTO: WTO Director-General Ngozi Okonjo-Iweala announced the selection of Johanna Hill as the next Deputy-Director General, taking on the role following the recent departure of Anabel González.
  • WTO: Macao formally deposited its instrument of acceptance for the Agreement on Fisheries Subsidies, becoming the 44th WTO member to officially join the agreement. Ngozi Okonjo-Iweala, WTO Director-General, received the instrument from Lúcia Abrantes Dos Santos, Permanent Representative, Macao.
  • U.S. – EU: Last week President Joe Biden met with European Council President Charles Michel and European Commission President Ursula von der Leyen under the highly anticipated U.S.-EU Summit. Cooperation was discussed on a range of topics, however, a steel agreement has yet to be reached.

“With a view to enabling sustainable economic relations with China we will push for a level playing field for our firms and workers. We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying. In this context, we will invest in our own economic vibrancy and reduce critical dependencies and vulnerabilities, including in our supply chains.”

—U.S.-EU Summit Joint Statement

USMCA

USMCA biotech corn dispute panelists selected

  • The panelists to review the USMCA dispute on Mexico’s biotech policies on GM corn were named last week, according to Politico reporting. The panelists Christian Häberli, Hugo Perezcano Díaz, and Jean Kalicki will serve on the panel according to a filing with the USMCA Secretariat. The filing indicates Häberli will chair the dispute panel.
    • According to the Centre for International Governance Innovation’s (CIGI) website, “Hugo Perezcano Díaz was the deputy director of International Economic Law at CIGI and previously a senior fellow. Prior to joining CIGI, he was an attorney and international trade consultant in private practice. Hugo worked for the Mexican government’s Ministry of Economy for nearly 20 years, serving as head of the trade remedy authority, and formerly as general counsel for international trade negotiations. He was lead counsel for Mexico in investor-state dispute settlement cases under the North American Free Trade Agreement (NAFTA) and other international investment agreements as well as in dispute settlement cases between states conducted under trade agreements that include NAFTA and the World Trade Organization agreement.”
    • Kalicki is an independent arbitrator and former partner at Arnold & Porter LLP, according to a LinkedIn profile. She is a member of the Governing Board of the International Council for Commercial Arbitration (ICCA), previously served on the London Court of International Arbitration (LCIA) (2014-2021), and as a member of the International Chamber of Commerce (ICC) Commission on Arbitration and the Board of Directors of SICANA, Inc. (ICC North America).
    • Häberli is a fellow at the World Trade Institute and former Chair of the WTO Committee on Agriculture and WTO dispute settlement panelist for nearly 20 years.
  • Under USMCA dispute settlement provision, the panel should render a ruling within 150 days, or 120 days in the case of a perishable item.

Supply Chains

House lawmakers to CBP, more comprehensive UFLPA enforcement

  • Representatives Carol Miller (R-WV) and Bill Pascrell (D-NJ) spearheaded a letter to U.S. Customs and Border Patrol urging the agency to “utilize every tool possible to pursue a more comprehensive [Uyghur Forced Labor Prevention Act] enforcement strategy to keep products tainted by forced labor out of the supply chains of goods imported into the U.S.” The lawmakers urged CBP to enhance coordination with external stakeholders and proactively work with imports to deepen compliance with UFLPA.
  • “CBP and the Forced Labor Enforcement Task Force (FLETF) have many tools to strengthen enforcement and provide much-needed clarity. We urge CBP and the Department of Homeland Security (DHS) to coordinate with civil society, private industry, and through the interagency task force to ensure all products entering the U.S. are in full compliance with the UFLPA. Doing so will protect American workers from unfair labor practices and encourage all companies to divest entirely from Xinjiang. CBP can help importers and U.S. companies navigate forced labor concerns by working with all parties to block out bad actors’ products from ever entering the U.S. market. It is imperative that CBP start active consultations with all relevant groups to ensure we are not only blocking forced labor imports but changing the market conditions in which forced labor occurs,” the letter stated.
    • Miller and Pascrell were joined by Representatives Blake Moore (R-UT), Greg Steube (R-FL), Terri Sewell (D-AL), Brad Wenstrup (R-OH), Jodey Arrington (R-TX), Michelle Steel (R-CA), Claudia Tenney (R-NY), and Beth Van Duyne (R-TX) in sending the letter to CBP Commissioner Troy Miller.
    • Since UFLPA became effective (June 2022), CBP has investigated over 5,580 shipments, denying 2,469 through September 2023. Electronics, apparel and textiles were the leading import product categories investigated, followed by industrial goods, and agriculture and food products.

Trade Policy

USTR, USDA constructing advisory panel on seasonal produce

  • The Office of the USTR and the Department of Agriculture (USDA) are moving to create an advisory committee on seasonal and perishable produce. The agencies, via a Federal Register notice, are soliciting applications for individuals to serve on a committee to provide advice and recommendations in connection with U.S. trade policy that concerns administrative actions. It also includes legislation that would promote the competitiveness of southeastern U.S. producers of seasonal and perishable agricultural products.
  • The Committee will comprise up to 25 members. Committee membership qualifications are outlined in the notice. In addition to general trade, investment, and development issues, members must have expertise in areas such as:
    • Growing and selling seasonal and perishable fruits and vegetables.
    • Understanding the needs and market dynamics affecting producers of seasonal and perishable fruits and vegetables in the Southeastern United States.
    • Understanding the existing State and Federal support programs and resources for producers of seasonal and perishable fruits and vegetables.
    • Developing and presenting actionable recommendations to U.S. Government officials.
  • Committee members must be U.S. citizens; cannot be full-time employees of a U.S. governmental entity, federally registered lobbyists, or foreign agents; and must represent a U.S. organization whose members (or funders) have a demonstrated interest in the subject area of the Committee.

Peru

USTR blocks illegal timber imports from Peru

  • Last week the Office of the United States Trade Representative (USTR) announced that the Biden Administration will continue to block any timber imports from Peruvian firm Inversiones La Oroza SRL (Oroza). According to USTR, “The Timber Committee directed CBP to continue to deny entry to any future shipments of timber products originating from Peru that were produced or exported by Oroza until the Government of Peru demonstrates that Oroza has complied with all applicable laws, regulations, and other measures of Peru governing the harvest of and trade in timber.” USTR further noted that U.S. officials “will continue to engage closely with Peru to combat illegal logging and work toward improving forest sector governance.”

Trade Remedy

U.S. farms groups ask Commerce to reconsider fertilizer import duties

  • Over 60 agriculture and farm groups sent a letter to Commerce Secretary Gina Raimondo requesting the agency “consider the impact of phosphate duties” on Moroccan imports as Commerce reconsiders import duties as remanded recently by the U.S. Court of International Trade (CIT). Last month the CIT found fault with certain aspects of the duty determination by the U.S. International Trade Commission (USITC) and Commerce Department in supporting the imposition of 19.97% import tariffs on phosphate fertilizer imports from Morocco.
  • In the letter the farm groups noted the “high costs and limited availability of fertilizer continue to strain family farms” and “increasingly limited options for fertilizer sources, farmers have struggled to diversify their supply chains, exposing them to risk.” The groups detailed the costs of higher fertilizer inputs writing, “Duties levied on phosphate imports combined with these other factors have led to substantial price volatility over the past three years as evident by phosphate price increases of over 230% from 2020 to 2022. During 2022, farmers spent $36.9 billion on fertilizer and lime, compared to $24.4 billion in 2020.”
  • The groups conclude the letter with the following request, “We strongly encourage Commerce to consider all appropriate factors as outlined by the CIT when determining the duty rate, and further consider impacts on agriculture when issuing the final determination. We stand ready to provide further information or answer any questions as needed.”

WTO

WTO announces appointment of new Deputy Director-General

Johanna Hill (El Salvador), new WTO Deputy-Director General
  • Last week, WTO Director-General Ngozi Okonjo-Iweala announced the selection of Johanna Hill as the next Deputy-Director General, taking on the role following the recent departure of Anabel González. Okonjo-Iweala welcomed Hill to the WTO and said: “As a member of the senior management team, she will play a key role together with me and the other DDGs in driving forward our objective of helping our members use trade as a means to raise living standards, create jobs and improve people’s lives.”
    • A newcomer to the WTO, Hill served most recently as Partner and Founder of the San Salvador Office of CA Trade Consulting Group. Her previous roles have included Vice Minister of Economy of El Salvador, Executive Director of El Salvador’s Chamber of Telecommunications, and member of the Board of Directors of Banco Azul.
    • She holds a Master’s degree in International Economic Policy from the School of International and Public Affairs, Columbia University, New York, and a Bachelor’s degree from Tufts University in Medford, Massachusetts. She is a native Spanish speaker and is fluent in English with proficiency in French.

Macao formally accepts Agreement on Fisheries Subsidies

  • Macao formally deposited its instrument of acceptance for the Agreement on Fisheries Subsidies, becoming the 44th WTO member to officially join the agreement. Ngozi Okonjo-Iweala, WTO Director-General, received the instrument from Ms. Lúcia Abrantes Dos Santos, Permanent Representative, Macao.
    • Okonjo-Iweala said, “I extend my warm appreciation to Macao, China for formally accepting the Agreement on Fisheries Subsidies. Macao, China’s support for curbing harmful subsidies in the fisheries sector underscores its dedication to preserving our oceans and marine life, crucial for global food security and environmental stability.”
    • Santos added, “The Agreement on Fisheries Subsidies is the first WTO agreement aiming at achieving environmentally sustainable development goals. It demonstrated members’ collective work to deliver new multilateral rules targeting harmful subsidies. Macao, China has been a strong supporter of the multilateral trading system. Today, I am very pleased to deposit Macao, China’s instrument of acceptance for the Agreement on Fisheries Subsidies. Macao, China looks forward to having a meaningful outcome in the second phase of negotiations. It is our collective effort to contribute to the sustainability of the oceans.”
  • The fisheries agreement requires acceptances from two-thirds of the WTO membership go into effect. Macao’s instrument of acceptance raises the total number of WTO members that have formally accepted the Agreement to 40 percent.
Lúcia Abrantes Dos Santos, Macao’s Permanent Representative and Dr. Ngozi Okonjo-Iweala, WTO Director General

U.S. – EU

U.S. – EU Summit, trade deals on steel and critical minerals remain work in progress

  • Last week President Joe Biden met with European Council President Charles Michel and European Commission President Ursula von der Leyen under the highly anticipated U.S.–EU Summit. Geopolitical conflicts, including Hamas’ terrorist attacks in Israel and Russia’s War against Ukraine, were major points of discussion, along with cooperation on climate change, trade, and resilient global supplies chains. Regarding the Global Arrangement on Sustainable Steel and Aluminum (GSA) and a critical minerals deal, the leaders confirmed making “progress” towards both initiatives, according to a joint statement. Other trade-related issues addressed include WTO reform and China relations. Further details were released in a joint statement.
    • WTO reform: “The United States and the European Union have a shared interest in reforming the WTO so that Members can better achieve the WTO’s foundational objectives and address modern-day imperatives. We will work towards substantial WTO reform by MC13 in 2024 including by conducting discussions with the view to having a fully and well-functioning dispute settlement system accessible to all WTO Members by 2024.”
    • Critical minerals deal: “We have made progress toward a targeted critical minerals agreement for the purpose of expanding access to sustainable, secure, and diversified high-standard critical mineral and battery supply chains and enabling those minerals extracted or processed in the European Union to count toward requirements for clean vehicles in the Section 30D clean vehicle tax credit of the Inflation Reduction Act. We look forward to continuing to make progress and consulting with our respective stakeholders on these negotiations in the coming weeks.”
    • China relations: “With a view to enabling sustainable economic relations with China we will push for a level playing field for our firms and workers. We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying. In this context, we will invest in our own economic vibrancy and reduce critical dependencies and vulnerabilities, including in our supply chains.”
    • Global Steel Arrangement: “On 31 October 2021, we announced that we would negotiate within two years an arrangement—known as the Global Arrangement on Sustainable Steel and Aluminum (Global Arrangement)—to address non-market excess capacity and emissions intensity of the steel and aluminum industries, including to foster undistorted transatlantic trade. Throughout these two years, we have made substantial progress to identify the sources of non-market excess capacity. We have also achieved a better understanding of the tools to address the emissions intensity of the steel and aluminum industries. We look forward to continuing to make progress on these important objectives in the next two months.”
  • Recall U.S. and EU leaders recently agreed to extend the deadline on the Global Steel and Aluminum Arrangement (GSA) to January 2024 to provide more time to close current negotiating gaps and avoid reimposition of tariffs. Prior to the U.S.-EU Summit, the European Commission approved authority to extend the negotiations as the previous Oct. 31 deadline remains elusive. Absent a deal or an extension, Trump-era tariffs and EU retaliatory tariffs on billions of dollars of transatlantic trade would be reimposed.
    • Last August, EU and U.S. officials affirmed intensified discussion on concluding an agreement prior to the Oct. 31, 2023, deadline. Absent a deal by Oct. 31, the moratorium on Trump-era tariffs and EU retaliatory measures would automatically return on more than $10 billion of exports. The GSA aims to resolve the transatlantic trade tensions emanating from Section 232 steel and aluminum tariffs imposed in 2018 under then President Donald Trump, citing national security concerns. Two years ago, the Biden Administration brokered an agreement with the EU to pause tariffs and retaliatory measures as an effort to find a permanent solution.

Food Security

India extends rice and sugar export restrictions

  • The Government of India will extend the 20% export duty on parboiled rice till March 31, 2024, to ensure sufficient local stock and control domestic upward price pressures, according to reports. Last August, India imposed a parboiled rice export tariff which initially was set to expire on Oct. 31, 2023.
    • Recall that India, the world’s largest rice exporter, imposed bans on non-basmati rice to counter rising domestic prices this past summer. The rice export restrictions apply to roughly 25% of India’s total rice exports. Rice is a staple for nearly half of the world’s population, particularly in Asia, accounting for roughly 90% of global consumption. African nations, such as Benin, Senegal, Togo, and others are also primary destinations for Indian rice exports and the continued ban could adversely impact prices and food security in the region.
    • Notably, the Indian government indicated that export exemptions could be allowed to other countries to meet their food security needs and based on the request of their government. According to reports, India has allowed the export of non-basmati white rice in varying quantities to Nepal, Cameroon, Cote d’Ivoire, Republic of Guinea, Malaysia, Philippines, Seychelles, the UAE, and Singapore.
  • India will also continue sugar export restrictions beyond the initial Oct. 31, 2023, target, according to a notice from the Directorate General of Foreign Trade. India introduced a quota system on Jun. 1, 2022, limiting sugar exports to about 6 million tons, owing to adverse weather conditions lowering harvest outcomes, compared with an unrestricted 11 million tons a year earlier.
    • The U.S. and EU are exempted from the restrictions under previously announced tariff-rate quota and concession (CXL), according to USDA reporting. The move deepens concerns over higher global sugar prices. Raw sugar futures are near their highest level since 2011 with expected lower sugar shipments from India and Thailand.