TRADE UPDATE

Food & Agriculture
June 4, 2024

By Kristy Goodfellow, Vice President of Trade and Industry Affairs

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HIGHLIGHTS

  • US-China:
    • China’s Minister of Agriculture and Rural Affairs (MARA) recently announced the issuance of new and renewed biosafety certificates for genetically engineered and gene-edited events. Notably, the approvals were only for products cultivated and processed in China, and no new or renewed biosafety certifications for GE events for imports as processing materials were issued.
    • A new study estimated the impact of the United States revoking China’s Permanent Normal Trade Relations status on California’s agriculture sector. The study estimates California’s exports to China could decrease by $800 million annually, which is 4% of the 2023 value of California’s global agricultural exports.
  • Trade:
    • USDA’s Economic Research Service (ERS) is now estimating the 2024 U.S. agricultural deficit will be $32.0 billion, a $1.5 billion increase from previous estimates. House Ways and Means Chairman Jason Smith (R-MO) and Agriculture Committee Chairman Glenn “G.T.” Thompson (R-PA) highlighted the trade deficit in an op-ed for The Hill, “Washington must not let politics stand in the way of American agriculture.”
    • In celebration of May as World Trade Month, USDA’s Foreign Agricultural Service highlighted top U.S. agricultural exports as a percentage of production. Export percentages that were highlighted ranged from cotton at 88% to corn at 12%.
  • Seasonable and Perishable Products: On May 30, USTR and USDA announced appointments to a Seasonal and Perishable Agricultural Products Advisory Committee. The advisory group is composed primarily of producers and distributors in the southeastern United States, but also includes representatives from production throughout North America.
  • WTO: On May 28, the WTO published a report and hosted a launch event on “Illicit Trade in Food and Food Fraud.” According to a cited study, fake, substandard, smuggled, and illegal products cost the global food industry an estimated $30-50 billion annually.

“The current trade deficit is the result of not only poor economic conditions and rising prices for American farmers and ranchers, but also trade barriers across the world that create an uneven playing filed in foreign markets for U.S.-produced goods.”

—Ways and Means Chairman Jason Smith (R-MO) and Agriculture Committee Chairman Glenn “G.T.” Thompson (R-PA) in a May 29 op-ed for The Hill

US-China

China’s Biosafety Certificates

  • China’s Minister of Agriculture and Rural Affairs (MARA) recently announced the issuance of new and renewed biosafety certificates for genetically engineered and gene-edited events, according to a GAIN report from USDA’s Foreign Agricultural Service.
  •  Notably, the approvals were only for products cultivated and processed in China; no new or renewed biosafety certifications for GE events for imports as processing materials were issued.
  • According to the GAIN report, the announcement “includes the first ever gene-edited wheat and corn as well as a GE corn event for domestic cultivation and processing. Also approved were four renewed and six new biosafety certificates for genetically modified microorganisms (GMMs) and 51 renewed biosafety certificates for GE cotton for domestic cultivation and processing.”
  • The report also notes that developers for the first ever gene-edited wheat event and gene-edited corn event for cultivation in China were Chinese companies.
  • USTR’s May 13 four-year review of actions taken in Section 301 Investigations of China’s Acts, Policy, and Practices, Related to Technology Transfer, Intellectual Property, and Innovation, highlights continued challenges in the agricultural biotechnology import approvals.

Agriculture and China’s Permanent Normal Trade Relations (PNTR) Status

  • Economists at University of California, Davis, and North Dakota State University published a new study measuring the impact of the United States revoking China’s PNTR status on California’s agriculture sector.
  • Assuming that China was to impose a 9.5% retaliatory tariff on all agricultural products, the researchers estimated that California’s exports to China could decrease by $800 million, or 4% of the 2023 value of California’s agricultural exports globally.
  • The authors note the scenario “underscores the need for informed trade policies that consider the complexity of international market dynamics and the essential role of trade relations in sustaining the vitality of California’s agricultural economy.”
  • The report emphasized the growth in agricultural exports to China since China’s WTO accession in 2001, and highlighted products and product groups where a significant share of California’s exports go to China—notably, cotton, livestock and meats, and grains and feeds.
  • The report did not evaluate the impact on agricultural inputs from China or trade of most processed food and agricultural products.

Trade

Agriculture Trade Balance

  • USDA’s Economic Research Service (ERS) is now estimating the 2024 U.S. agricultural deficit will be $32.0 billion, a $1.5 billion increase from previous estimates.
  • Estimates for U.S. exports remained unchanged at $170.5 billion.
  • Estimates for imports were revised upward to $202.5 billion, primarily due to an increase in the estimate for horticultural products.
  • The export estimate for China was reduced by $1 billion based on strong competition on soybeans and corn.
  • On May 29, Ways and Means Chairman Jason Smith (R-MO) and Agriculture Committee Chairman G.T. Thompson (R-PA) published an agriculture trade-focused op-ed in The Hill, “Washington must not let politics stand in the way of American agriculture.”
  • In the op-ed, the authors note, “[t]he current trade deficit is the result of not only poor economic conditions and rising prices for American farmers and ranchers, but also trade barriers across the world that create an uneven playing filed in foreign markets for U.S.-produced goods.”

World Trade Month

  • In celebration of May as World Trade Month, USDA’s Foreign Agricultural Service (FAS) highlighted top U.S. agricultural exports as a percentage of production. Products ranged from cotton at 88% to corn at 12%.
  • According to ERS figures cited by FAS, an average 23% of the output of nonmanufactured agricultural products were exported between 2013 and 2022.

Seasonable and Perishable Products

Seasonal and Perishable Agricultural Products Advisory Committee

  • On May 30, USTR and USDA announced appointments to Seasonal and Perishable Agricultural Products Advisory Committee.
  • This committee was established after members of Congress requested examination in the context of a Section 301 petition and the USTR commitment to pursue assistance for the Southeast seasonal produce industry.
  • In a release, USTR noted the Biden Administration’s commitment “to supporting specialty crop growers through this committee, as well as efforts such as USDA’s Specialty Crops Competitiveness Initiative, which is providing tools and resources to increase the competitiveness of U.S. specialty crops in foreign markets, enhance domestic marketing, and improve production and processing practices.”
  • The advisory group is composed primarily of producers and distributers in the south eastern United States, but also includes representatives from production throughout the United States and North America.

World Trade Organization

Illicit Trade in Food and Food Fraud

  • On May 28, the WTO published a report and hosted a launch event on “Illicit Trade in Food and Food Fraud.”
  • The report notes “illicit trade in food undermines international trade by distorting markets, eroding consumer confidence and triggering the imposition of trade barriers due to safety concerns. Simultaneously, it poses significant public health risks.”
  • The report suggested excessively high tariffs, trade-distorting subsidies, and other trade barriers provide incentives for smuggling and illicit trade in food. As a result, the report encourages a reduction of barriers.
  • The report references a Transnational Alliance to Combat Illicit Trade (TRACIT) study, which estimates fake, substandard, smuggled and illegal products cost the global food industry an estimated $30-50 billion annually.
  • The report includes a list of the most heavily targeted products in food fraud — meat, seafood, alcoholic beverages, coffee, milk, fruit and vegetable juice, spices, olive oil, honey, and organic products.
From WTO