TRADE UPDATE

Food & Agriculture
December 12, 2023

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

HIGHLIGHTS

  • U.S. – Mexico: Secretary of Treasury Janet Yellen visited Mexico City last week and met with Mexican officials, including Mexican President Andrés Manuel López Obrador, to discuss the two countries’ economic relationship and security.
  • Food Security: The FAO Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, held steady for November 2023.
  • Trade Policy: Last week, 58 agriculture organizations sent a letter urging the U.S. International Trade Commission (USITC) to reconsider tariffs on Moroccan fertilizers due to the impact on family farms.
  • Trade Policy: In the Unified Regulatory Agenda for Fall 2023, the Administration estimates publication of a final rule on (voluntary) U.S. origin claims by USDA/FSIS in March 2024.
  • WTO: The WTO reports that the value of world merchandise trade covered by trade facilitating measures far exceeded that impacted by trade restrictive measures in the period between mid-October 2022 and mid-October 2023.
  • Climate and Environment: On Dec. 4, COP held a designated Trade Day for the first time. The day featured several events oriented towards utilizing trade and technology transfers to help with meeting 2030 climate goals. USDA Secretary Tom Vilsack attended COP28 from Dec. 8-10 and emphasized the global benefits of current climate-focused U.S. investments.
  • CRA Guest Blog: The Corn Refiners Association’s Trade and Economic Policy Intern Jacob Berch published a guest blog on the significance of the U.S.-Mexico bilateral relationship.

“We’re proud to be here in Dubai, highlighting the steps we’re taking to tackle the climate crisis and bring new opportunities to producers and rural communities in America and worldwide. USDA and the Biden-Harris Administration are making unprecedented investments in climate-focused practices and partnerships and, as we share our learnings from American agriculture and forestry on a global scale, the progress we’re making domestically will also have international benefits.”

—USDA Secretary Tom Vilsack at COP28

U.S. – Mexico

TREASURY SECRETARY YELLEN VISITS MEXICO CITY

Treasury Secretary, Janet Yellen
Treasury Secretary, Janet Yellen
  • Secretary of Treasury Janet Yellen visited Mexico City last week and met with Mexican officials, including Mexican President Andrés Manuel López Obrador, to discuss aspects of the countries’ economic relationship. A Department of Treasury readout on the meeting highlighted that Secretary Yellen and President López Obrador reviewed “shared priorities, including strengthening information sharing to combat illicit finance and measures to protect both countries’ national security through bolstering their critical supply chains.”
    • The New York Times reported that meetings between U.S. and Mexican officials lasted over three days. The results of this engagement were “that the U.S. and Mexico would begin working more closely to screen foreign investments coming into both countries with a new working group to weed out potential national security threats.”
    • Secretary Yellen gave remarks following a meeting with the Mexican Secretary of Finance and Public Credit Rogelio Ramírez de la O. She stressed the strength of U.S.-Mexico economic ties and stated, “Greater coordination on financial and regulatory policy can further increase trade and investment and the benefits they bring.” She further stressed that the meetings served the purpose of increasing coordination “on countering illicit drug trafficking.”

Food Security

GLOBAL FOOD PRICES REMAIN LARGELY STEADY IN NOVEMBER

  • In November 2023, the FAO Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, was steady at 120.4 points. This constitutes no change from the October level of the index. Within the index, prices rose for vegetable oils, dairy goods, and sugar. These increases were offset by declines in cereal and meat prices. When compared to November 2022, the November 2023 overall Food Price Index was 14.4 points, or 10.7%, lower.
    • The FAO Cereal Price Index “averaged 121.0 points in November, down 3.7 points (3.0 percent) from October and as much as 29.1 points (19.4 percent) from its value a year ago. International prices of coarse grains fell the most, dropping by 5.6 percent month-on-month. The decline was dominated by a sharp fall in world maize prices, underpinned by an increase in farmers’ selling activity in Argentina and a downward pressure from seasonally higher supplies in the United States of America, where the production estimate was revised upwards.”
    • The FAO Vegetable Oil Price Index “averaged 124.1 points in November, up 4.1 points (3.4 percent) from October after declining for three consecutive months. The increase in the price index was driven by higher world palm and sunflower oil prices, more than offsetting lower soy and rapeseed oil quotations.”
    • The FAO Dairy Price Index “averaged 114.2 points in November, up 2.5 points (2.2 percent) from October, marking the second consecutive monthly increase, but still down 23.2 points (16.9 percent) from its value one year ago. In November, international price quotations for butter and skim milk powder increased, reflecting high import demand from Northeast Asian buyers, limited inventories, and increased internal demand ahead of winter holidays in Western Europe.”
    • The FAO Meat Price Index “averaged 111.8 points in November, down marginally (0.4 percent) from October, reflecting minor drops in the prices of poultry, pig and bovine meats. At this level, the index value stood 2.8 points (2.4 percent) below its corresponding value one year ago. The drop in international poultry meat prices reflected elevated supplies, mainly from Brazil, notwithstanding the challenges to production stemming from avian influenza outbreaks across many countries.”
    • The FAO Sugar Price Index “averaged 161.4 points in November, up 2.2 points (1.4 percent) from October and as much as 47 points (41.1 percent) from its level in the same month last year. The increase in prices in November was mostly related to heightened concerns over global export availabilities in the current season amid worsening production prospects in two leading exporters, Thailand and India, due to severe dry weather conditions associated with the El Niño event.”

Trade Policy

AGRICULTURE GROUPS URGE ITC TO LOWER TARIFFS ON MOROCCAN FERTILZERS

  • Last week, 58 agriculture organizations sent a letter urging the U.S. International Trade Commission (USITC) to reconsider tariffs on Moroccan fertilizers due to the impact on family farms. This isn’t the first time that farm groups have expressed concern about tariffs on Moroccan fertilizers. Recall that in October over 60 agriculture groups sent a letter to Commerce Secretary Gina Raimondo requesting the agency “consider the impact of phosphate duties” on Moroccan imports. In November, the U.S. Commerce Department substantially lowered its duties on Moroccan fertilizer imports, from 19.97% to 2.12%, as a part of an annual review. However, the National Corn Growers Association (NCGA) contended, “that decision was retroactive and largely academic as the Moroccan company producing the fertilizers has halted shipping of all but one of its products into the U.S.”
    • In a press release regarding the latest letter, the NCGA stated, “Efforts to permanently reduce the duties will involve several steps and multiple agencies over the coming months. This month, Commerce will have another opportunity to make the lower duties permanent when it considers a remand on the issue from the U.S. Court of International Trade. Then, in January, the ITC is expected to make a ruling based on another remand ordered by the court.”
    • The recent letter argued, “Rising prices for fertilizer inputs have strained America’s farmers and ranchers and have impacted availability for this critical component of nutrient and yield management. Without predictable options to source this product, farmers struggle to plan for the future.” It further stated, “Agriculture supply chains are intricate and complicated, and the premise that re-shipping product from an originally intended destination to respond to regional demand fluctuations is simply not correct. Instead, reliance on this incorrect premise has led to high fertilizer costs that create volatility and compromise the ability of farmers to be successful.”

U.S. COUNTRY OF ORIGIN LABELING

  • This week, the Biden-Harris Administration released the Unified Regulatory Agenda for Fall 2023, which included an update on the USDA Food Safety and Inspection Service (FSIS) rulemaking on (voluntary) labeling of FSIS-regulated products with U.S. origin claims. The agenda states that this is in “Final Rule Stage” and estimates final action in March 2024.
  • USDA FSIS states that “[b]ased on the consumer survey results, reviews of consumer research, and comments received on the petitions, FSIS is revising its regulations to reduce consumer confusion surrounding current voluntary U.S.-origin labeling policy.”
  • You will recall that the United States lost a WTO dispute against mandatory COOL in 2015, and that Canada and Mexico are authorized to retaliate. As such, USDA amended COOL requirements in 2016.
  • Comments to draft regulation were submitted by the Governments of Canada and Mexico, as well as many industry groups in those countries.
  • BGOV authors Zach C. Cohen and Dean Scott reported this week on how beef country of origin labeling is playing out in the Montana Senate elections.
    • The article notes that Senator Jon Tester (D-MT) has co-sponsored legislation on COOL, which requires USTR to develop a means of reinstating the requirements that complies with the World Trade Organization.
    • The article notes that Representative Matt Rosendale (R-MT), a potential opponent, wants to limit labels to cattle “exclusively” born, raised, and slaughtered in the United States.

WTO

WTO REPORTS TRADE FACILITATING MEASURES OUTPACE TRADE RESTRICTIVE MEASURES

  • The WTO reports that the value of world merchandise trade covered by trade facilitating measures far exceeded that impacted by trade restrictive measures in the period between mid-October 2022 and mid-October 2023. Still, WTO Director-General Ngozi Okonjo-Iweala has indicated that trade restrictions continue to weigh on the global economy, particularly affecting food price volatility.
    • At a meeting of the Trade Policy Review Body last week, Director-General Ngozi Okonjo-Iweala stated, “The fact WTO members have been taking more practical steps to facilitate imports is welcome and illustrates how reducing trade barriers and delays is a valuable tool for pushing back against inflationary pressures. That said, the pace of implementation of new export restrictions has increased since 2020, first with regard to medical products in the context of the COVID-19 pandemic, and subsequently vis-à-vis food, animal feed and fertilizer with the war in Ukraine.”
WTO Director-General, Ngozi Okonjo-Iweala

Climate and Environment

COP28 HOSTS TRADE DAY

  • On Dec. 4, COP held a designated Trade Day for the first time. The day featured several events oriented towards utilizing trade and technology transfers to help with meeting 2030 climate goals. One key moment of the day was when WTO Director-General Ngozi Okonjo-Iweala formally announced the WTO Secretariat’s 10 trade policy tools to assist governments with reaching global climate targets. These tools highlight how trade policy measures, such as reassessing import tariffs on low-carbon solutions, can be incorporated into national strategies on combatting climate change. Other important moments from Trade Day included:
    • A discussion led by financial sector leaders on how sustainable finance in trade can be leveraged to reach climate targets
    • A panel with the International Chamber of Commerce that went over the role of trade in defining global value chains for small and medium-sized enterprises
    • An event led by the UNCTD highlighting the increased demand for critical minerals due to the green energy transition and growth opportunity it presents for resource-rich nations
  • Recall that world leaders, government officials, and civil society are gathering for COP28, which runs from Nov. 30-Dec. 12, 2023, and is being hosted by the UAE.

USDA SECRETARY VILSACK AT COP28

  • From Dec. 8-10, USDA Secretary Vilsack attended COP28 in Dubai, UAE.
  • Secretary Vilsack’s press release emphasized the global benefits of current U.S. investments. “We’re proud to be here in Dubai, highlighting the steps we’re taking to tackle the climate crisis and bring new opportunities to producers and rural communities in America and worldwide. USDA and the Biden-Harris Administration are making unprecedented investments in climate-focused practices and partnerships and, as we share our learnings from American agriculture and forestry on a global scale, the progress we’re making domestically will also have international benefits.”
  • Secretary Vilsack emphasized investments in Climate-Smart Commodities, Agriculture Innovation Mission for Climate (AIM for Climate), and Food System Transformation initiatives.
  • PoliticoPro reported that, in addition to speaking on a panel together, Vilsack met with Mexican Agriculture Secretary Victor Villalobos and floated the idea of a 2024 meeting with their Canadian counterpart.

CRA Guest Blog

CRA TRADE POLICY INTERN PUBLISHES GUEST BLOG ON U.S.-MEXICO RELATIONS

  • The current co-author of this newsletter and the Corn Refiners Association’s Trade and Economic Policy Intern Jacob Berch published a guest blog on the CRA website regarding the importance of the U.S.-Mexico bilateral relationship. The piece delves into the extensive cultural and trade ties between the U.S. and Mexico, stressing the agriculture sector’s dependence on the relationship. It further explains the heightened significance of this partnership in the face of rising global tensions.