TRADE UPDATE

Food & Agriculture
May 21, 2024

By Kristy Goodfellow, Vice President of Trade and Industry Affairs, and Mary Lekatz-Wallace, Communications Intern

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HIGHLIGHTS

  • US-China: On May 13, the USTR completed its four-year review of actions taken in the Section 301 Investigation of China’s Acts, Policies, and Practices, Related to Technology Transfer, Intellectual Property, and Innovation. USTR Katherine Tai recommended that tariffs on products currently included in the Section 301 lists remain and additional tariffs be added to certain other non-agricultural products. The report highlighted the forced technology transfer in agricultural biotechnology.
  • Miscellaneous Tariff Bill (MTB): On May 14, House Ways & Means Trade Subcommittee Chair Adrian Smith (R-NE) announced the introduction of the Miscellaneous Tariff Reform Act. A new MTB would provide temporary tariff suspensions and reductions for products with no U.S. producers.
  • US-Kenya: From May 13-17, the United States and Kenya held the fifth in-person negotiating round of the Strategic Trade and Investment Partnership (STIP). The round included discussions on agriculture.
  • Trade Promotion:
    • On May 15, USDA announced increased availability of credit guarantee for sales of U.S. agricultural commodities under the Commodity Credit Corporation‘s GSM-102 program.
    • On May 17, USDA announced the availability of more than $20 million in funding through the Assisting Specialty Crops Exports (ASCE) initiative.
  • Poultry Trade: This month, ERS published a new report called “Evaluating the Effects of Nontariff Measures on Poultry Trade,” which concluded there was a small positive effect on international poultry trade (relative to domestic trade) when WTO members notified new or modified sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) measures on poultry.

“But for too long, the PRC has been playing by a different set of rules with unfair and anticompetitive economic practices. Those unfair practices include forced technology transfer, including cyber hacking and cyber theft; non-market policies, such as targeting industrial sectors for dominance, labor rights suppression, and weak environmental protection; and flooding markets worldwide with artificially cheap products that wipe out the competition.

The President’s action today is a part of his vision to rebuild our supply chains and our ability to make things in America to lower costs, outcompete the PRC, and encourage the elimination of practices that undercut American workers and businesses. We are doing that by investing in manufacturing and clean energy here at home and raising tariffs to protect these investments.”

—USTR Katherine Tai during a May 14 White House press briefing

US-China

Section 301 Tariffs

  • On May 13, the USTR completed its four-year review of actions taken in the Section 301 Investigation of China’s Acts, Policies, and Practices, Related to Technology Transfer, Intellectual Property, and Innovation.
  • USTR Katherine Tai is recommending that Section 301 tariffs currently on certain products remain in place and additional tariffs be added to other non-agricultural products.
  • The review asserts that, in a quest for dominance in agriculture biotechnology, China uses opaque administrative reviews to facilitate technology transfers, including through agriculture biotechnology import approvals.
  • The review also notes China’s massive industrial policy initiative, Made in China 2025, which “directs state and private resources to upgrade China’s indigenous mastery of ten strategic manufacturing sectors and dozens of industries within those broad sectors,” including agricultural machinery equipment.
  • Tai notes that since her predecessor, former Ambassador Robert Lighthizer, first invoked Section 301 in 2018, the “tariffs have been effective in encouraging the PRC to take some steps to address the issues identified in the Section 301 investigation.”
Taken from USTR’s Four Year Review of China’s Section 301 Investigation

US-Kenya

Strategic Trade and Investment Partnership (STIP)

  • From May 13-17, the United States and Kenya held their fifth in-person negotiating round of the STIP.
  • According to USTR, the negotiations included agriculture; workers’ rights and protections; and customs and trade facilitation and enforcement.
  • A joint statement at the conclusion of the event noted that both parties’ intended to complete the agreement by the end of the year.
  • USTR hosted a public listening session on May 16, which included officials from Kenya.
  • The STIP negotiations were launched on July 14, 2022, with the goal of creating “high standard commitments in a wide range of areas.”

Congress

New Miscellaneous Tariff Bill Introduced

  • On May 14, House Ways & Means Trade Subcommittee Chair Adrian Smith (R-NE) announced the introduction of the Miscellaneous Tariff Reform Act.
  • Similar to this newly proposed Miscellaneous Tariff Bill (MTB), the previous MTB provided temporary tariff suspensions and reductions for products with no U.S. producers.
  • CropLife America expressed its support for the bill, stating that the bill “allows for investments to support research and development of the important innovations and technology farmers need to grow the world’s food, fiber, and fuel, and other pesticide professionals need to keep our communities safe from pests and disease.”
  • When this MTB expired in December 2020, CLA added, businesses and their costumers paid $1.5 billion in anticompetitive tariffs.
  • If passed, Smith’s new MTB would:
    • Reauthorize the U.S. International Trade Commission (ITC) application process for domestically unavailable inputs in 2025 and 2028;
    • Approve duty-free treatment of products recommended under the 2019 application process through Dec. 31, 2025; and
    • Provide retroactive duty relief on tariffs paid on these products from Jan. 1, 2021, to now.
  • According to Smith, the bill will also include a provision designed to limit Chinese participation in the program.

Trade Promotion

USDA Export Credit Guarantee Program (GSM-102) and Specialty Crop Export Challenge

  • On May 15, USDA announced increased availability of credit guarantee for sales of U.S. agricultural commodities under the Commodity Credit Corporation’s General Sales Manager-102 program, which provides credit guarantees to encourage financing of commercial exports of U.S. agricultural commodities and reduce risk to lenders.
  • Allocations as of May 15 are $850 million for Africa, Middle East, Turkey, and Central Asia; $908 million for Asia; and $3.2 billion for Latin America.
  • On May 17, USDA announced the availability of more than $20 million in funding for projects to address specialty crop export challenges.
  • The Assisting Specialty Crops Exports (ASCE) initiative is a Biden Administration initiative to create “new and better markets at home and abroad for U.S. producers and agribusinesses.”

Poultry Trade

Study on The Effects of Nontariff Measures on Poultry Trade

  • USDA’s Economic Research Service has published a new report called “Evaluating the Effects of Nontariff Measures on Poultry Trade.”
  • The study used nondiscriminatory sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) notifications and concluded there was a small positive effect on the value of international poultry trade relative to domestic trade when the WTO implemented these notifications
  • The findings suggest notifications that facilitate trade (e.g., measures harmonizing regulations) have a bigger effect than those notifications that inhibit trade (e.g., bans).