TRADE UPDATE

Food & Agriculture
June 18, 2024

By Kristy Goodfellow, Vice President of Trade and Industry Affairs, Isabella Montero, Communications Intern, Molly Shields, Government Relations Intern

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HIGHLIGHTS

  • Trade Preference Programs: On June 12, the House Ways and Means Trade Subcommittee held a hearing to discuss trade preference programs set to expire in 2025, including the African Growth and Opportunity Act (AGOA), the Nepal Trade Preference Program (NTPP), and trade preference programs for Haiti.
  • Farm Bill Trade Promotion Funding: On June 11, Senate Agriculture Committee Ranking Member John Boozman (R-AR) and the other Republicans on the panel released a farm bill framework bill that would double funding for USDA’s Market Access Program and Foreign Market Development programs on top of the $1.2 billion in Commodity Credit Corporation funding secured at USDA.
  • Renewable Diesel: USDA’s Foreign Agricultural Service published an International Agricultural Trade Report explaining the changes in global feedstock trade that have resulted from the sharp increase in global production of renewable diesel.
  • EU-China: China appears to be targeting certain food and agricultural imports (e.g., pork, dairy, Cognac) from the EU in response to additional European tariffs imposed on Chinese electric vehicles.
  • G-7: During the G-7 Summit in Italy, held from June 13-15, leaders agreed on “reinforcing global food security and enhancing climate resilience, including by launching the Apulia Food Systems Initiative,” among other commitments for collaboration and action.
  • Supply Chain Hearing: On June 12, the International Trade Administration’s Advisory Committee on Supply Chain Competitiveness convened to discuss supply chain resiliency.
  • US-Uzbekistan: On June 12, bilateral meetings took place between the President of the Republic of Uzbekistan Shavkat Mirziyoyev, representatives of the Government of Uzbekistan and the United States Trade Representative Ambassador Katherine Tai.
  • Food Price Index: On June 7, the Food and Agriculture Organization of the United Nations released its monthly Food Price Index (FFPI), reporting an increase in the cereal and dairy price index and a decrease in the vegetable oil and sugar index.

“These programs are designed to foster economic growth in some of the least developed economies in the world, while strengthening U.S. leadership and influence abroad. This is especially important as countries like China and Russia seek to spread their malign influence globally.”

—-Rep. Adrian Smith (R-NE), Chairman of the House Ways and Means Trade Subcommittee, during Trade Subcommittee meeting on trade preference programs

Trade Preference Programs

Sub-Saharan Africa, Haiti, and Nepal

  • On June 12, the House Ways and Means Trade Subcommittee held a hearing to discuss trade preference programs set to expire in 2025, including the African Growth and Opportunity Act (AGOA), the Nepal Trade Preference Program (NTPP), and trade preference programs for Haiti.
  • Subcommittee Chairman Adrian Smith (R-NE) outlined the significance of trade preference programs, stating that they “are designed to foster economic growth in some of the least developed economies in the world, while strengthening U.S. leadership and influence abroad. This is especially important as countries like China and Russia seek to spread their malign influence globally.”
  • Notably, Smith advocated for AGOA renewal to include reciprocal market access. He also stated in his testimony that “we must … use the annual review process to address any unfair treatment of U.S. agricultural products.” 
  •  Smith pointed to the urgency of renewing these trade preference programs and argued, “the AGOA program has been the cornerstone of United States trade and economic engagement with sub-Saharan Africa.”
  • Subcommittee Ranking Member Earl Blumenauer (D-OR) stated, “I can confidently speak for House Democrats when I say we are firmly committed to reauthorizing AGOA and HOPE before their expiration in September 2025.” Blumenauer also acknowledged problems with the program, “especially concerning labor rights violations and noncompliance with Haiti’s national labor laws.”
  • In April, the Committee passed the Generalized System of Preferences Reform Act. Smith has also introduced legislation to reauthorize the Miscellaneous Tariff Bill. 

Farm Bill

Trade Promotion Funding

  • On June 11, Senate Agriculture Committee Ranking Member John Boozman (R-AR) and other Republicans on the panel released a farm bill framework that would double funding for USDA’s Market Access Program (MAP) and Foreign Market Development (FMD) programs.
  • This GOP proposal resembles the allocations in House Agriculture Committee Chair Glenn Thompson’s (R-PA) farm bill proposal.
  • According to their outline, Senate Republicans want to double MAP and FMD funding to “help increase our competitiveness overseas.” The document argues the funding infusion “is desperately needed considering we are projected to see a record $32 billion agricultural trade deficit this year.”
  • Senate Ag Committee Chair Debbie Stabenow (D-MI) proposed to keep MAP and FMD funding at current levels, with its allocations at $175.5 million and $27 million in 2023. Stabenow also referenced the $1.2 billion in Commodity Credit Corporation funding secured for USDA’s Regional Agricultural Promotion Program.
  • Boozman supported a bipartisan approach to this bill, claiming that his framework “builds on the momentum from [Agriculture] committee passage in the House and Chairwoman Stabenow’s release of Senate Democrats’ priorities.”
  • In response, Stabenow stated, “Similar to the House, the framework also appears to propose spending far in excess of available funding.”

Renewable Diesel

USDA Published Report on Renewable Diesel Production Growth’s Impact on Trade

  • USDA’s Foreign Agricultural Service published an International Agricultural Trade Report explaining the changes in global feedstock trade that have resulted from the sharp increase in global production of renewable diesel.
  • The report explains the production boom is based on federal incentives such as the Blender’s Tax Credit and Renewable Fuel Standard as well as state incentives like the California Low-Carbon Fuel Standard. “Without federal credits, there would not be a market for renewable diesel production,” the report states.
  • FAS further notes the policies have led to an increase in imports of animal fats and vegetable oils.
  • The report concludes that “[w]hile many wildcards could affect the U.S. biofuel, animal fats, and oilseed markets, renewable diesel production is anticipated to continue to grow and alter feedstock markets.”

EU-China

Agriculture Implicated in EU-China Trade Tension

  • China appears to be targeting certain food and agricultural imports from the EU in response to additional European tariffs the EU imposed on Chinese electric vehicles.
  • On June 13, China’s Ministry of Commerce suggested it is considering an anti-dumping (AD) investigation into EU pork imports and countervailing duty (CVD) investigation on EU dairy imports.
  • Earlier this year, China opened an AD investigation on EU brandy. French Bureau National Interprofessionnel du Cognac (BNIC) reports the issue was raised between French President Emmanuel Macron and Chinese President Xi Jinping. In a public statement, BNIC says “Indeed, all commentators agree that there is a link between the Chinese anti-dumping investigation targeting Cognac and the European anti-subsidy investigation targeting Chinese electric vehicles.”

G-7

G-7 2024 Summit in Italy

  • The G-7 Summit was held in Italy from June 13-15, bringing together leaders of the United States, Italy, Canada, France, Germany, Japan, and the United Kingdom.  
  • Notably for agriculture, the leaders in their ending Communiqué agreed on “reinforcing global food security and enhancing climate resilience, including by launching the Apulia Food Systems Initiative.”
  • The leaders also agreed to take action to address climate change, pollution, biodiversity loss, and to spearhead global efforts to preserve forests and oceans, and end plastic waste.
  • The leaders agreed to act together to “confront non-market policies and practices that undermine the level playing field and our economic security,” as well as other specific and general areas of cooperation and action.

Supply Chain Competitiveness

Advisory Committee Meeting

  • On June 12, the International Trade Administration’s Advisory Committee on Supply Chain Competitiveness convened to discuss supply chain resiliency. Discussions focused on expanding Indo-Pacific supply chain relations, investment in clean energy, and artificial intelligence (AI) development.
  • Kristina Costa, Deputy Assistant to the President for Clean Energy Innovation and Implementation, presented on the Inflation Reduction Act’s (IRA) tax credits incentivizing clean vehicles, biofuels, and sustainable aviation fuel.
  • The Committee did not discuss food or agriculture interventions at large; however, Arun Venkataraman, Assistant Secretary for Global Markets, noted the United States’ intention to grow relations with India by supplementing the country’s feedstock demand for biofuel and ethanol production.

US-Uzbekistan

USTR Travels to Uzbekistan

  • From June 11 to 12, bilateral meetings took place between the President of the Republic of Uzbekistan, Shavkat Mirziyoyev, and the U.S. Trade Representative Katherine Tai to affirm their “commitment to diversifying the bilateral trade and investment relationship and to deepening dialogue on shared economic priorities.”
  • Tai expressed her support for the reauthorization of the General System of Preferences (GSP) program and “recognized GSP’s role in supporting export diversification in Uzbekistan.”
  • The United States conveyed its support for Uzbekistan’s efforts to improve worker’s rights and align its trading system with WTO’s principles through domestic reforms.
  • The United States and Uzbekistan “committed to further collaboration on women’s economic empowerment and disability rights, highlighting the importance of ensuring that the benefits of trade extend to all workers, and supply chain resilience.”
  • In these meetings, “the Governments welcomed the opportunity for U.S. federally authorized meat and poultry establishments to export their products to Uzbekistan as of June 1, 2024.”
  • According to USDA Global Trade Atlas , the United States exported just over $6.7 million in agricultural and related products to Uzbekistan in 2023, including more than $1 million in planting seeds. The United States imported more than $7.5 million in agricultural and related products from Uzbekistan, including more than $3 million in processed fruit and vegetables.

Food Price Index

Domestic and International Food Price Index Released

  • On June 7, the Food and Agriculture Organization of the United Nations released its monthly FAO Food Price Index (FFPI). The FFPI is defined as “a measure of the monthly change in international prices of a basket of food commodities.” This month’s index “stood at 120.4 points in May 2024, up 1.1 points (0.9 percent) from its revised April level.”
  • Relative to 2023, food prices have decreased, however, compared to recent months, the FFPI has increased. Specifically, the cereal price index has increased by 7.1 points (6.3%) since April, and the dairy price index has increased by 2.3 points (1.8%) since April. Contrastingly, the vegetable oil index has decreased by 3.1 points (2.4%) and the sugar price index has decreased by 9.5 points (7.5%) in the last month.
  • Meanwhile, on June 12, the U.S. Bureau of Labor Statistics published the updated U.S. Consumer Price Index (CPI) for May. The CPI is defined as “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services,” to track food price changes in the United States.
  • Notably, CPI for overall food at home did not change from April and increased by only 0.4% for food away from home. 
  • The U.S. CPI for food at home is projected to increase by 1.2% in 2024, compared with 11.4% in 2022.