TRADE UPDATE

Food & Agriculture
February 27, 2024

By Kristy Goodfellow, Vice President of Trade and Industry Affairs, and Natalie Diez, Trade and Economic Policy Intern

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HIGHLIGHTS

  • WTO: MC13 officially began on Monday, Feb. 26 in Abu Dhabi, United Arab Emirates. MC13 is scheduled to conclude on Thursday, Feb. 29. India is once again attracting attention, as they seek a permanent solution to public stockholding (PSH) and resist extending a moratorium on e-commerce tariffs.
  • Trade Remedies: : In a Feb. 20 report, a WTO compliance panel found that the EU demonstrated that the United States failed to bring certain anti-dumping (AD) and countervailing duties (CVD) measures for ripe olives from Spain into conformity with the adopted findings in the panel report.
  • Free Trade Agreements: A study by the European Commission’s Joint Research Centre published on Feb. 22, 2024, evaluated the impacts of 10 free trade agreements on EU agri-food exports and imports. The study estimates both increased exports and imports because of the agreements, and a slightly higher agri-food trade balance.
  • Trade Preference Programs: Several reports indicate that House Ways & Means Committee are preparing to introduce legislation to renew the Generalized System of Preference (GSP). Several U.S. food and agricultural industry groups have publicly advocated for reform and renewal of GSP.
  • Environment: On Dec. 12, 2023, the UK Secretary of State for Environment, Food and Rural Affairs announced draft legislation to stop products from illegal deforestation from being sold in the United Kingdom. The system will first be applied to cattle products (excluding dairy), cocoa, palm oil, and soy.

“Given the centrality of the issue, this week I implore you to deliver an agriculture outcome at MC13 even if it is setting the platform to do better or more solid work going forward.”

—Director- General Okonjo-Iweala of the WTO

WORLD TRADE ORGANIZATION

WTO THIRTEENTH MINISTERIAL CONFERENCE (MC13) UNDERWAY

  • MC13 officially began on Monday, Feb. 26 in Abu Dhabi, United Arab Emirates. MC13 is scheduled to conclude on Thursday, Feb. 29.
  • Timor-Leste and Comoros will officially accede to the WTO during MC13.
  • A working session on agriculture is scheduled for Tuesday at 3 p.m. (Abu Dhabi Time), followed by a “convergence building session on agriculture” at 5 p.m.
  • On Feb. 8, the Committee on Agriculture Special Session Chair published this “State of Play in the Agriculture Negotiations.”
  • A USTR Press Release states that Ambassador Katherine Tai is traveling to MC13 with Chief Agricultural Negotiator Doug McKalip and Deputy USTR Maria Pagan.
  • Following the last few WTO Ministerials, India continues to seek a permanent solution to public stockholding (PSH). PSH is a domestic support program that India uses to implement price support programs, and a program that many other agricultural exporting countries argue can greatly distort agricultural markets. Additionally, India has so far been resistant to extending a moratorium on e-commerce tariffs.
  • Prior to the start of MC13, 61 members of a climate coalition of trade ministers, including the United States, issued a statement calling for concrete commitments. After listing voluntary actions, the press release stated “…we find it important to provide dynamic and active leadership to simulate inclusive cooperation at the WTO on the nexus of trade, climate change adaptation and mitigation, and sustainable development.”
  • In opening remarks by Director-General Okonjo-Iweala, speaking about the agriculture negotiations, she stated “Given the centrality of the issue, this week I implore you to deliver an agriculture outcome at MC13 even if it is setting the platform to do better or more solid work going forward.”

TRADE REMEDIES

UNITED STATES ANTI-DUMPING AND COUNTERVAILING DUTIES ON RIPE OLIVES FROM SPAIN

  • In a Feb. 20 report, WTO compliance panel found that the EU demonstrated that the United States failed to bring certain anti-dumping (AD) and countervailing duties (CVD) measures for ripe olives from Spain into conformity, according to the adopted findings in the panel report.
  • The European Union argued that the United States did not comply with the DSB’s recommendations concerning Section 771B of the US Tariff Act of 1930. In an EU press release following the publication of the WTO panel report, the EU says the decision is a “clear and full win for the EU.”
  • Section 771B of the U.S. Tariff Act of 1930, is the provision of U.S. law used to determine the existence and extent of indirect subsidization (i.e. “pass-through” of benefit) in CVD investigations, involving an agricultural product process from a raw agricultural product.  
  • Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade stated: “The U.S. has not fully implemented the recommendations of the original panel, in violation of WTO rules. Meanwhile, Spanish olive producers are facing a difficult situation, with Spanish imports at risk of being driven out of the U.S. market. We therefore call on the U.S. side to swiftly bring itself into compliance and provide relief to the Spanish olives sector, which has been unlawfully hit by the U.S. anti-subsidy duties since 2018.”
  • According to an EU press release, in 2017, Spain was the biggest exporter in ripe olives to the United States. In 2022, exports dropped significantly and the cost of Spanish ripe olives for U.S. importers increased, decreasing the demand in the U.S. market. According to the EU, Spain’s exports to the United States were only 20% of total U.S. ripe olive imports, compared to 76% in 2017.
  • The United States must now accept adoption of the compliance panel’s report or challenge the compliance ruling, which would effectively stop progress on the dispute because of the lack of functioning Appellate Body.

TRADE AGREEMENTS

ANALYSIS OF EFFECT OF EU FREE TRADE AGREEMENTS ON AGRI-FOOD TRADE

  • A study by the European Commission’s Joint Research Centre published on Feb. 22, 2024, evaluated the impacts of 10 free trade agreements on EU agricultural food exports and imports.
  • The models used in this analysis predict that in 2032, EU agri-food exports will be between €3.1 billion and €4.4 billion higher than they would have been without these 10 trade agreements, and increased imports will be between €3.1 billion and €4.1 billion higher.
  • The model predicts a faster rate of growth in exports of dairy, wine and other beverages, and processed agri-food products.
  • The study finds that certain sectors including beef, poultry, rice, and sugar will face increased competition. These products are protected in the agreement with tariff rate quotas (TRQ).
  • The study examined the impact of the UK trade agreements with Australia, New Zealand, and countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It found that the UK could take away some EU market share, notably in beef, wine and other beverages (and tobacco) processed food, dairy and sheep meat.
  • Janusz Wojciechowski, Commissioner for Agriculture stated: “Free trade agreements open new opportunities, enabling our agri-food sector to meet growing international demand for safe, sustainable, and high-quality EU food and drinks.”
From page 7 in the report: https://publications.jrc.ec.europa.eu/repository/handle/JRC135540

TRADE PREFERENCE PROGRAMS

U.S. GENERALIZED SYSTEM OF PREFERENCE RENEWAL

  • Several reports indicate that House Ways & Means Committee are preparing to introduce legislation to renew the Generalized System of Preference (GSP).
  • GSP, a trade preference program that allows duty-free treatment to certain products from developing countries, lapsed in the United States in 2020.
  • Several U.S. food and agricultural industry groups have publicly advocated for reform and renewal of GSP.
    • For example, in a House Committee on Ways & Means Subcommittee on Trade hearing from Sept. 20, 2023, the National Pork Producers Council states, “NPPC strongly supports the renewal of GSP, as it is a valuable program that will give U.S. trade negotiators another too to persuade countries to eliminate trade restrictions on U.S. products.”  
  • Most agricultural products are eligible for GSP duty-free treatment, except for certain products subject to tariff-rate quotas.
  • The 2023 Congressional Research Service report, GSP: Overview and Issues for Congress, outlines the program, and also provides information on the effect of the GSP program, highlights some stakeholder concerns, and outlines options for Congress.
  • Amidst general criticism of the efficacy of GSP programs globally, the United Nations Conference on Trade and Development published a report in 2023— “The Generalized System of Preferences: How much does it matter for developing countries.” 

ENVIRONMENT

UK DRAFT DEFORESTATION LEGISLATION

  • On Dec. 12, 2023, the UK Secretary of State for Environment, Food and Rural Affairs announced draft legislation to stop products from illegal deforestation from being sold in the United Kingdom. 
  • According to an Introduction of the Forest Risk Commodities regulation statement from Dec. 12, 2023:
    • The system will first be applied to cattle products (excluding dairy), cocoa, palm oil, and soy. These products are also included in the EU’s Deforestation Regulation, in addition to coffee, timber, rubber, and products derived from beef, furniture, or chocolate.
    • Compliance with the regulation will be required for a global annual turnover threshold of £50m, with some exceptions.
    • Enforcement will include a wide “array of sanctions,” including monetary fines. 
  • According to a USDA Foreign Agricultural Service GAIN report, “The legislation constitutes an expansion of regulatory oversight to voluntary reporting but has also been criticized for not going far enough in regulating legal deforestation abroad.”
  • According to the same GAIN report, adoption of the legislation for this draft regulation is underway, and dates for publishing these “statutory instruments” have not been made public.