TRADE UPDATE

Food & Agriculture
November 14, 2023

By Kristy Goodfellow, Vice President of Trade and Industry Affairs, and Jacob Berch, Trade and Economic Policy Intern

HIGHLIGHTS

• Trade Policy: Last week, the U.S. Department of Agriculture (USDA) announced that it was introducing a new effort to enhance the competitiveness of U.S. specialty crops dubbed the Specialty Crops Competitiveness Initiative.
• Trade Policy: United States Trade Representative Ambassador Katherine Tai visited Indianapolis last Friday as a part of the Biden Administration’s Investing in Rural America tour, according to a USTR press release.
• Trade Policy: Last week, the New Democrat Coalition Trade Taskforce sent a letter to President Biden outlining the coalition’s trade policy priorities.
• IPEF: The U.S. government announced that it is hosting an IPEF ministerial Nov. 13-14, 2023, in San Francisco, according to a USTR press release.
• U.S. – China: President Biden and Chinese President Xi Jinping will meet in San Francisco on Nov. 15. The meeting will be only the second in-person meeting between the two leaders during President Biden’s term.
• U.S. – China: After years of trying to negotiate a free trade agreement (FTA) with the United States, Uruguay is actively pursuing one with China, according to The Wall Street Journal (WSJ). The WSJ piece highlights the situation in Uruguay as emblematic of a broader shift in Latin America towards China due to a lack of U.S. engagement.
• Agriculture Policy: According to the Organization for Economic Co-operation and Development’s (OECD) Agricultural Policy Monitoring and Evaluation 2023 report, government support for agriculture has reached record levels in recent years. The OECD highlighted that “China, India, the United States and the European Union,” represented, “36%, 15%, 14% and 13% of total support provided, respectively.”
• WTO: In a letter to Ambassador Katherine Tai and Secretary of Agriculture Tom Vilsack, 30 food and agriculture associations voiced that, in the upcoming World Trade Organization (WTO) meeting, the U.S. should “prioritize achievable, short-term goals while laying the groundwork for a more ambitious, long-term effort to reform the agricultural trading system.”

“Specialty crop producers are hard at work to keep operations profitable while implementing sustainable practices, and President Biden is proud to invest in innovation within the industry to remain competitive domestically and in markets across the world.”

—USDA Deputy Secretary Torres Small

Trade Policy

USDA announces Specialty Crops Competitiveness Initiative

• Last week, the U.S. Department of Agriculture (USDA) announced that it was introducing a new effort to enhance the competitiveness of U.S. specialty crops. Dubbed the Specialty Crops Competitiveness Initiative, the effort includes a department-wide review of USDA’s assistance programs for specialty crops, increased USDA engagement with the specialty crop industry, and an opportunity for specialty crop stakeholders to submit comments on how USDA can support them better through a Request for Information in the Federal Register.
  • Deputy Secretary Xochitl Torres Small stated, “We all count on America’s specialty crops for reliable access to nutritious, fresh foods. Specialty crop producers are hard at work to keep operations profitable while implementing sustainable practices, and President Biden is proud to invest in innovation within the industry to remain competitive domestically and in markets across the world.”A USDA press release on the initiative also announced that it is “investing $70.2 million in the Specialty Crop Research Initiative to support 21 research and Extension projects that address key challenges of national, regional and multistate importance in sustaining all components of food and agriculture, including conventional and organic food production systems.”
  • The news release further highlights that this effort is just one manner in which USDA is assisting the specialty crops industry. Last month, Secretary of Agriculture Tom Vilsack announced the “new Regional Agricultural Promotion Program (RAPP)” which includes “$100 million set aside to help specialty crop producers access global markets through targeted technical assistance to overcome onerous trade barriers.” More information on this broader initiative can be found in this press release.

Tai visits Indiana

• United States Trade Representative Ambassador Katherine Tai visited Indianapolis last Friday as a part of the Biden Administration’s Investing in Rural America tour, according to a USTR press release. Ambassador Tai will be highlighting the U.S. government’s efforts to decrease trade barriers for the agriculture industry abroad and increase access to foreign markets.
  • The visit is a part of a broader push by the Biden Administration to highlight investments in rural America which involves President Joe Biden and high-level U.S. officials visiting rural communities across the country. According to USTR, “Ambassador Tai will tour Starkey Farms, a seventh-generation family farm committed to local and regional farming conservation.”

New Democrat Coalition Trade Taskforce sends letter to Biden on U.S. trade policy

• Last week, the New Democrat Coalition Trade Taskforce sent a letter to President Biden outlining the coalition’s trade policy priorities which are meant, “to maintain the United States as a leader in the global marketplace and enact trade policies that will benefit American workers, consumers, growers, producers, and businesses,” according to a New Democrat Coalition press release.
  • The letter has “eight key objectives to build on recent progress and further strengthen U.S. trade policy.” These objectives are:
    • Counter Competitive Threats and Abuses from China
    • Establish a Durable and Sustainable Approach to Trade
    • Return to Reciprocal Bilateral/Regional Trade Agreements
    • Strengthen the Indo-Pacific Economic Framework (IPEF)
    • Build a More Robust Trade Relationship with Taiwan
    • Reduce Barriers to Trade that Increase Costs for Americans and Hurt U.S. Businesses
    • Promote the U.S. Digital Economy and Lead Negotiations on Agreements Related to Digital Trade
    • Support Agricultural Exports by Reducing Tariff and Non-Tariff Barriers
  • The New Democrat Coalition Trade Task Force Chair Representative Lizzie Fletcher (D-TX) and Vice Chairs Representatives Don Beyer (D-VA) and Jimmy Panetta (D-CA) released the following statement on the letter: “Today, our Task Force seeks to build on this legacy by calling on the Biden administration to join New Dems in implementing our eight key policy objectives to strengthen America’s trade economy.”

IPEF

IPEF ministerial announced ahead of APEC in San Francisco

• The U.S. Government announced that it is hosting an IPEF ministerial on Nov. 13-14, 2023, in San Francisco, according to a USTR press release. The press release stated that during this ministerial “the ministers will review the progress to date on the negotiations of high-standard outcomes under Pillars I (Trade), III (Clean Economy), and IV (Fair Economy).” The ministerial follows the seventh in-person IPEF negotiating round from Nov. 5-12, 2023, also in San Francisco.
  • “I am encouraged by the tremendous progress the United States and our fellow IPEF partners have made since we first began negotiations in September 2022,” said USTR Ambassador Katherine Tai regarding progress in IPEF talks. “We are meeting the moment in the face of today’s pressing challenges, and I look forward to hosting trade ministers in San Francisco with Secretary Raimondo to deliver on the promise of lifting up our economies and the middle class here in the United States and the Indo-Pacific region,” she continued.
  • These developments come in the wake of the sixth round of IPEF negotiations, which lasted from Oct. 15-24, 2023, and took place in Kuala Lumpur, Malaysia. Recall that following the sixth round of in-person negotiations in Kuala Lumpur, Commerce Secretary Gina Raimondo stated, “We had an excellent session in Kuala Lumpur. There’s still more work to do.”
  • The IPEF negotiating countries, other than the U.S., include Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Notably, India opted out of negotiations on the Trade Pillar.

U.S. – China

Xi set to meet with Biden at APEC

• President Joe Biden and Chinese President Xi Jinping will meet in San Francisco on Nov. 15, 2023. The meeting is occurring alongside the Asia-Pacific Economic Cooperation (APEC) summit. The San Francisco meeting will be only the second in-person meeting between the two leaders during Biden’s term. This also constitutes Xi’s first trip to the U.S. since 2017. This meeting is much anticipated, with months of engagement being done to rebuild the U.S.-China diplomatic relationship.
  • Furthermore, Treasury Secretary Janet Yellen met with Chinese Vice Premier He Lifeng last week to discuss U.S.-China economic and trade relations. According to Reuters reporting, “[Secretary Yellen] agreed with Chinese Vice Premier He Lifeng to ‘intensify communication’ on economic issues but warned him to crack down on Chinese companies that give material support to Russia for its war in Ukraine.”
  • A range of U.S. interest groups have been supportive of the diplomatic thaw between the U.S. and China, penning a letter to Biden and Xi in favor of stable relations. According to The Hill, the letter was signed by “professional groups representing farmers, educators, workers, scientists, climate advocates, veterans and more.” The letter urged the leaders to “to make clear, both in private and publicly, your shared commitment to the sustained reduction of dangerous frictions in bilateral relations, and to energetic Sino-American cooperation on issues central to the preservation of the planet, peace, and prosperity.”
  • As China seeks closer ties with the U.S. in the leadup to this meeting, China is using “soybean diplomacy,” buying “3 million metric tons of the commodity from the US just this week,” according to Bloomberg. China’s decision appears to be a gesture of collaboration and goodwill right before the presidents are set to meet.

The WSJ highlights growing ties between Uruguay and China as U.S. pulls away

• After years of trying to negotiate a free trade agreement (FTA) with the United States, Uruguay is actively pursuing one with China, according to The Wall Street Journal (WSJ). The WSJ piece argues that the situation in Uruguay is emblematic of a broader shift in Latin America towards China due to a lack of U.S. engagement. China has reportedly ramped up its donations to Uruguay’s “schools, hospitals and military in recent years.”
  • The WSJ piece further stresses that there “are similar stories across the region, according to government officials and former diplomats. They say ineffective engagement by the Biden administration with Central and South American governments on a range of issues has driven countries closer to Beijing.”

Agriculture Policy

OECD advocates for reform in market-distorting agriculture policy in report

• According to the Organization for Economic Co-operation and Development’s (OECD) Agricultural Policy Monitoring and Evaluation 2023 report, government support for agriculture has reached record levels in recent years. An OECD press release announcing the report stated total “support to agriculture reached record levels of USD 851 billion per year during 2020-22 for the 54 countries covered by a new OECD report, as governments sought to shield consumers and producers from global crises and high inflation. Just under half of this government support was in the form of measures with the greatest potential for market distortions, such as border tariffs and subsidy payments based on output.”
  • The OECD singled out large economies and economic unions for being largely responsible for this support of the agriculture sector. The press release stated, “China, India, the United States and the European Union,” represented, “36%, 15%, 14% and 13% of total support provided, respectively.”
  • Further reporting from the OECD cites that of this support for agriculture, “USD 518 billion per year comes in the form of budgetary support from taxpayers, with the remaining USD 333 billion per year being transferred by consumers through policies lifting domestic prices above reference prices.”

WTO

Agriculture groups send letter to U.S. officials on upcoming WTO meeting

• In a letter to United States Trade Representative Ambassador Katherine Tai and Secretary of Agriculture Tom Vilsack, thirty food and agriculture associations voiced that in the upcoming World Trade Organization (WTO) meeting the U.S. should “prioritize achievable, short-term goals while laying the groundwork for a more ambitious, long-term effort to reform the agricultural trading system.”  Some of the goals emphasized in this letter include the need for a market access proposal and discussions on restoring binding dispute settlement mechanisms at the WTO.
  • The letter stated, “U.S. leadership is needed to reset the WTO’s agriculture negotiations. At MC13, we ask that you prioritize improvements in global food security by encouraging further implementation of current WTO commitments, greater transparency, and other achievable outcomes that reduce trade distortions and contribute to predictable, open markets. The United States should also continue to object to concessions on market price support calculations, which would render the disciplines of the WTO Agreement on Agriculture toothless for many large agricultural exporters. State intervention in agricultural markets through market price support is the most trade-distorting form of support, is harmful to global food security, and should be discouraged.”
  • On the issue of market access, the letter argued, “The lack of market access proposals is understandable given the seemingly unbridgeable differences in the negotiating positions of members in the agriculture negotiations, but it may also be a missed opportunity. While future WTO reform may not lock in market access gains equivalent to a free trade agreement with a specific country, the benefits of reducing agricultural trade barriers globally could be significant. Agriculture is one of the most protected sectors in the world, so reducing the potential for trade disruption could improve food security and resilience while creating more opportunities for those struggling to access global markets.”