TRADE UPDATE

Food & Agriculture
April 9, 2024

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

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HIGHLIGHTS

  • Trade Remedies: A U.S. anti-dumping (AD) and countervailing duty (CVD) investigation is underway on a common herbicide – 2,4 dichlorophenoxyacetic acid (2,4-D) – from China and India. The investigation was requested by Corteva Agriscience LLC on March 14, and publicly opposed by the National Corn Growers Association.
  • U.S.-Kenya: The fourth negotiating round for the Strategic Trade and Investment Partnership (STIP) between the United States and Kenya is underway in Washington, D.C., from April 2-12.
  • World Trade Organization: On April 4, USTR issued a Communication to WTO Members on Climate and Trade, in which USTR proposed deepening Members’ understanding of trade-related climate measures by contemplating policy design and implementation, as well as data and methodology.
  • U.S. Competitiveness:
    • On April 3, Agriculture Secretary Tom Vilsack and USTR Ambassador Katherine Tai published a recorded conversation focused on agricultural trade. Tai addressed the trade deficit and Vilsack highlighted recent trade successes, the strength of the U.S. economy, and USDA’s trade promotion programs.
    • On April 2, USDA’s Economic Research Service published a simple graph and explanation of exchange rate values in the top two markets for U.S. agricultural exports — China and Mexico. ERS specifically highlights that over the past two years, China’s yuan has depreciated relative to the U.S. dollar, weakening U.S. exports to China, while the Mexican peso has strengthened relative to the U.S. dollar.
    • On April 4, the U.S. Bureau of Economic Analysis (BEA) released a report drawing attention to a slight increase in the U.S. goods and services trade deficit in Feb. 2024.
  • Trade Promotion: USDA announced that eligible organizations can apply for FY 2025 funding for five export programs through the U.S. Department of Agriculture with a deadline of June 14, 2024.

“Our consumers are in such a strong position that they have spent more on agricultural products, including on imports, and then also because of the strength of the U.S. economy and the strength of the U.S. dollar that that has impacted the balance in terms of imports and exports.”

—USTR Ambassador Katherine Tai responding to the question “Has the U.S. balance of trade shifted?” during a recorded agricultural trade talk with Ag Secretary Tom Vilsack.

Trade Remedies

Antidumping and Countervailing Duty Investigation Underway on Common Herbicide

  • On March 20, the U.S. International Trade Commission gave notice that it is in the preliminary phase of an anti-dumping (AD) and countervailing duty (CVD) investigation on 2,4 dichlorophenoxyacetic acid (2,4-D) from China and India.
  • The investigation was requested by Corteva Agriscience on March 14.
  • According to Corteva’s Petition, 2,4-D is an “active ingredient used in a wide variety of herbicides.”
  • According to the Petition, Corteva believes it is the sole U.S. producer of a “domestic like product.”
  • According to Trade Data Monitor, the United States imported $22.9 million of 2,4-D from China and $21.6 million from India in 2023. Meanwhile, the United States exported $19.3 million of 2,4-D in 2023.
  • On April 3, National Corn Growers Association (NCGA) President Harold Wolle testified before the ITC, opposing the petitions. “Farmers are price takers, not makers in selling our commodities, and closely managing our production costs is crucial to our success,” Wolle said according to an NCGA press release.

U.S.-Kenya

Strategic Trade and Investment Partnership (STIP)

  • According to a USTR press release, the fourth negotiating round for the Strategic Trade and Investment Partnership (STIP) between the United States and Kenya is underway in Washington, D.C. Meetings will take place from April 2-12.
  • According to USTR, this negotiating round will primarily cover agriculture, workers’ rights, and environment. The negotiations also include work on anti-corruption, digital trade, customs, and trade facilitation.
  • On April 5, USTR released summaries of the negotiating text, including provisions on trade facilitation for agricultural products, food security, sustainable production, and cooperation in innovation and technology. The proposed text also includes annexes and a consultation mechanism on meat and cheese terms, distilled spirits and wine.
  • Assistant USTR Constance Hamilton is leading the U.S. delegation; Kenya’s Principal Secretary for Trade Alfred K’Ombudo is heading the Kenyan delegation.
  • The last face-to-face negotiations occurred in January 2024 in Nairobi, Kenya.
  • STIP, which launched in July 2022, aims to promote engagement, cooperation, sustainable economic growth, and encourage regional integration in Africa.

WTO

Climate and Trade

  • USTR Issued a Communication to WTO Members on Climate and Trade called Understanding the Opportunities and Challenges of the Green Transition: Coherence and Interoperability of Trade-Related Climate Measures.
  • According to the USTR press release, the intent of the communication is to “advance discussions among WTO members on practical and constructive ways that trade policies can support and complement WTO Members’ efforts to address climate change.”
  • The United States proposed bringing “ripe” topics that have been under discussion in the informal Trade and Environmental Sustainability Structured Discussions (TESSD) back into regular WTO committee work to support members interested in developing data-driven, science-based, practical policy options and tools.
  • The United States proposed deepening members’ understanding of policy design, implementation, data, and methodology through WTO member retreats; thematic discussion in WTO committee work; multi-stakeholder events; and a compilation report.

U.S. Competitiveness

U.S. Trade Deficit

  • On April 4, the U.S. Bureau of Economic Analysis (BEA) released a report drawing attention to a slight increase in the U.S. goods and services trade deficit in February 2024.
  • According to the U.S. BEA, the U.S. trade deficit increased from $67.6 billion in January to $68.9 billion in February.
  • BEA notes that exports of goods and services increased by 2.3%, while imports increased by 2.2% in February.
  • Notably for agriculture, the report highlights exports of foods, feeds, and beverages increasing $1.7 billion, including a $1 billion increase for soybeans; imports of food, feed, and beverages increased $1.3 billion.
  • Compared to February 2022, the monthly trade deficit in goods and services has decreased from more than $100 billion to less than $75 billion.

Exchange Rates and Agricultural Trade

  • On April 3, Agriculture Secretary Tom Vilsack and USTR Ambassador Katherine Tai published a recorded conversation focused on ag trade. Vilsack talked about recent trade successes, the strength of the U.S. economy, and USDA’s trade promotion programs.
  • Separately, on April 2, USDA’s Economic Research Service published a simple graph and explanation of exchange rate values in the top two markets for U.S. agricultural exports — China and Mexico — based on its monthly agriculture exchange rate data set.
  • In this publication, ERS explains that exchange rates influence U.S. agricultural trade, with a stronger foreign currency favoring U.S. exports to that country.
  • ERS specifically highlights that over the past two years, China’s has depreciated relative to the U.S. dollar, weakening U.S. exports to China, while the Mexican peso has strengthened relative to the U.S. dollar.
  • While the report includes a caveat that “exchanges rates are one of several factors that can influence U.S. agricultural trade,” it explains a weaker yuan is associated with decreased export opportunities for food and agriculture exports to China, while a stronger peso is associated with increased export opportunities to Mexico.
  • The report notes that U.S. agricultural exports to China decreased to $33.7 billion in FY 2023 from $36.2 billion in FY 2022. U.S. agricultural exports to Mexico rose to $28.2 billion in FY 2023 from $28 billion in FY 2022.

Trade Promotion

USDA Accepting 2025 Export Market Development Applications

  • On April 4, USDA’s Foreign Agricultural Service announced that eligible organizations can now apply for FY 2025 funding for five export market development programs.
  • The programs include the Market Access Program, Foreign Market Development Program, Technical Assistance for Specialty Crops Program, Quality Samples Program, and Emerging Markets Program.
  • The press release notes that all these programs aim to promote and facilitate the export of U.S. agricultural, fish, and forest products.
  • The deadline for submitting applications for these programs is June 14, 2024.