TRADE UPDATE

Food & Agriculture
November 21, 2023

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

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HIGHLIGHTS

  • Trade Promotion: USDA announced 2024 trade missions to Korea, India, Canada, Colombia, Vietnam, and Morocco. The Commodity Credit Corporation (CCC) issued a final rule incorporating the new Regional Agricultural Promotion Program into an existing trade promotion regulation.
  • IPEF: The Biden Administration announced that the IPEF Trade Pillar would not be completed at the Asia-Pacific Economic Cooperation (APEC) summit, as anticipated. The 14 IPEF partners announced the “substantial conclusion” of the clean economy, fair economy, and supply chain chapters.
  • U.S. – China: President Joe Biden and Chinese President Xi Jinping met in San Francisco last week alongside the Asia-Pacific Economic Cooperation (APEC) summit.
  • Domestic Food Security: In October, the overall Consumer Price Index for All Urban Consumers (CPI-U) did not change for the first time in the past 12 months, according to the Bureau of Labor Statistics. However, food inflation continued to rise month-to-month, going up 0.3% in October.
  • WTO: Several WTO committees have met or will be meeting by the end of November. In preparation for those meetings, the United States submitted another food security paper, this time emphasizing using trade rules to promote sustainable productivity growth.

“USDA is committed to promoting export opportunities in non-traditional markets and ensuring that U.S. agricultural commodities and products are available to diverse consumer groups around the world.”

—USDA Secretary Tom Vilsack

Trade Promotion

USDA Announces 2024 Trade Missions

  • On Nov. 16, USDA Secretary Tom Vilsack announced locations for the 2024 USDA-led trade missions, which are Korea, India, Canada, Colombia, Vietnam, and Morocco.
  • Secretary Vilsack said, “USDA is committed to promoting export opportunities in non-traditional markets and ensuring that U.S. agricultural commodities and products are available to diverse consumer groups around the world.”
  • In the public announcement, USDA’s Foreign Ag Service highlighted some recent market access successes, including dropping retaliatory tariffs and reducing some tariffs in India, Mexico granting access to U.S. potatoes after 20 years of engagement, and renegotiating beef safeguard levels under the U.S.-Japan Trade Agreement.  
USDA TFAA Under Secretary Alexsis Taylor during a recent trade mission to Malaysia and Singapore

USDA Issues Final Rule on Regional Agricultural Promotion Program

  • On Nov. 17, a final rule was issued on the administration of the new Regional Agricultural Promotion Program (RAPP). The rule was an amendment to the Agricultural Trade Promotion Program regulation by the Commodity Credit Corporation (CCC).
  • While the rule was effective upon publication, CCC is accepting comments until Dec. 18, 2023.
  • The RAPP program was a bipartisan request by the Senate Committee on Agriculture, Nutrition, and Forestry and will be utilizing CCC funds.
  • Last month, Secretary of Agriculture Tom Vilsack announced that USDA will be providing $2.3 billion to boost U.S. commodity exports and bolster international food aid, including $1.3 billion towards RAPP.
  • The announcement states, “In the face of significant and unpredictable challenges around the world, including impacts to international commodities markets in the wake of ongoing conflicts, a changing climate, an increasing agricultural trade deficit, and increased competition in U.S. export markets, USDA recognizes that additional investments in market development are needed to keep U.S. agriculture ahead of the competition.”

IPEF

IPEF Trade Pillar Remains Unfinished

  • The Biden Administration announced that the IPEF Trade Pillar would not be completed at the Asia-Pacific Economic Cooperation (APEC) summit, as anticipated.
  • USDA issued a press statement stating that during the IPEF ministerial, they “took stock of the progress made in the Trade Pillar” and noted they are “seeing progress in the areas of trade facilitation, inclusivity, technical assistance and economic cooperation, and agriculture, among others.”
  • Recall that the U.S. government recently hosted an IPEF ministerial from Nov. 13-14, 2023, in San Francisco, according to a USTR press release. The ministerial followed the seventh in-person IPEF negotiating round from Nov. 5-12, 2023, also in San Francisco.
  • Business group leaders were disappointed in this outcome, with John Murphy, Senior Vice President of the U.S. Chamber of Commerce, stating, “We need this spiral of timidity in U.S. trade policy to be brought to a halt because it really threatens the competitiveness of U.S. companies internationally,” according to Politico.
  • Prior to these recent developments, there were months of engagement by the U.S. to finish the agreement in November.
  • 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.

Three of Four IPEF Pillars Completed Following Recent Ministerial

  • Despite being unable to finalize the Trade Pillar, IPEF partners were able to substantially conclude negotiations on the Fair Economy and Clean Economy pillars of the agreement at the third in-person IPEF ministerial in San Francisco, California, according to the Department of Commerce. Further, the fourteen IPEF partners signed the Supply Chain Pillar of the agreement.
    • A Department of Commerce press release on this progress stated, “Through the determined efforts and perseverance of the group, the 14 IPEF partners have achieved unprecedented results in record time, developing innovative, first-of-their-kind approaches to addressing 21st-century challenges and strengthening economic engagement across a critical region comprising 40 percent of global GDP and 28 percent of global goods and services trade.”
    • Regarding the Clean Economy Pillar, the Department of Commerce stated, “the IPEF partners are committed to actively pursue their shared climate objectives and respective pathways to net-zero emission economies while also ensuring the promotion of sustainable growth and success for all partners. To that end, the proposed agreement covers a range of issues critical to transitions to clean economies, including efforts towards energy security and transition, climate resilience and adaptation, greenhouse gas emissions mitigation, and the promotion of sustainable livelihoods and just transition.”
    • Regarding the Fair Economy Pillar, the Department of Commerce stated, “the IPEF partners are committed to working together to enhance fairness, inclusiveness, transparency, the rule of law, and accountability in their economies to improve the trade and investment environment in the Indo-Pacific region. The IPEF partners further recognize that a more transparent and predictable business environment can spur greater trade and investment in their markets and level the playing field for businesses and workers in the economies of the IPEF partners. To achieve these goals, under the proposed agreement, the IPEF partners would work together to enhance their efforts to prevent and combat corruption including bribery, and support efforts to improve tax transparency and the exchange of information, domestic resource mobilization, and tax administration.”

U.S. – China

Chinese President Xi Jinping Meets with President Biden, U.S. Business Leaders

  • President Joe Biden and Chinese President Xi Jinping met in San Francisco last week alongside the Asia-Pacific Economic Cooperation (APEC) summit. This was only the second in-person meeting between the two leaders during Biden’s term. The meeting facilitated the resumption of high-level military communications and discussion to curb the flow of Chinese chemicals used to create fentanyl. Xi also spoke to over “300 executives and officials” including “Tim Cook, the chief executive of Apple; Larry Fink of BlackRock; and Jerry Brown, the former governor of California,” according to the New York Times.
    • A readout from the White House regarding the meeting highlighted, “President Biden emphasized that the United States and China are in competition, noting that the United States would continue to invest in the sources of American strength at home and align with allies and partners around the world.”
    • The White House readout went on to state “The two leaders made progress on a number of key issues. They welcomed the resumption of bilateral cooperation to combat global illicit drug manufacturing and trafficking, including synthetic drugs like fentanyl, and establishment of a working group for ongoing communication and law enforcement coordination on counternarcotics issues … The two leaders welcomed the resumption of high-level military-to-military communication, as well as the U.S.-China Defense Policy Coordination Talks and the U.S.-China Military Maritime Consultative Agreement meetings. Both sides are also resuming telephone conversations between theater commanders.”

Domestic Food Security

Inflation Steadies Overall as Food Prices Continue to Edge Higher

  • In October, the overall Consumer Price Index for All Urban Consumers (CPI-U) did not change for the first time in the past 12 months, according to the Bureau of Labor Statistics.
  • However, food inflation continued to rise month-to-month, going up 0.3% in October. The cost of food at home rose by 0.3% and the cost of food away from home rose by 0.4%. The Bureau of Labor Statistics reported, “Four of the six major grocery store food group indexes increased over the month. The index for meats, poultry, fish, and eggs rose 0.7 percent in October as the index for beef increased 1.2 percent and the index for pork rose 1.3 percent. The other food at home index increased 0.3 percent over the month, as did the dairy and related products index. The index for cereals and bakery products rose 0.2 percent in October, after falling 0.4 percent in September.”
Latest inflation data from the Bureau of Labor Statistics

WTO

Several Ag-Related WTO Committee Meetings and Activities Underway

  • On Nov. 14, there was an SPS Committee Thematic Session on Risk Communication, Misinformation and Disinformation on the margins of the SPS Committee meeting. The United States proposed the theme, noting that “this was a topical, relevant theme for discussion by the SPS Committee, as regulators around the world were increasingly exposed to information from a multitude of sources, some of which may have specific biases or objectives that are not science-based or risk-based and do not contribute to the development of justified SPS measures.” 
  • During the SPS Committee meetings held Nov. 15-16, WTO Members continued work on the MC12 SPS Declaration Work Program and related reporting for the upcoming 13th Ministerial Conference to be held in Abu Dhabi in February 2024.
  • In preparation for the November committee meetings, notably the Committee on Agriculture meeting taking place this week, the United States submitted another paper on using WTO rules to improve food security, this time emphasizing trade rules to promote sustainable productivity growth, including through the use of innovative tools and technologies.
    • The report highlights specific practices that have an adverse impact on the environment and worsen the effects of climate change, including input intensification, land use expansion, misuse of pesticides, over-tilling of soil, and use of inefficient animal and plant production practices.
    • The report calls on policymakers to “shift their food security focus to prioritize supporting farmers’ incomes and domestic production capacity through incentivizing growth in agricultural productivity.” The report also notes that “WTO Members should not prescribe the ways in which other Members should meet their own sustainability and food safety goals.”