TRADE UPDATE

Food & Agriculture
July 23, 2024

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

HIGHLIGHTS

• TRADE COMES INTO 2024 SPOTLIGHT: Industry officials are working to understand how the shift in the top of the Democratic Party presidential ticket will impact the trade policy conversation in the upcoming election after President Joe Biden announced his decision to leave the campaign Sunday and endorse Vice President Kamala Harris. The move comes after trade made headlines at last week’s Republican National Convention.
• SPAIN: On July 16, The US International Trade Commission voted to maintain the existing antidumping and countervailing duties on ripe olives from Spain. This will undoubtedly upset interested parties in the European Union, including Spain, who have successfully challenged this U.S. measure at the WTO.
• CHINA: The Government of China faced sharp criticism and questioning during its WTO Trade Policy Review — a WTO exercise in which member countries’ trade and related policies are examined and evaluated at regular intervals.
• REGIONAL TRADE AGREEMENTS:
  • WTO members have continued negotiating and approving new trade agreements, which was highlighted during a WTO meeting where four new agreements were reviewed.
    
  • New Zealand, Costa Rica, Iceland, and Switzerland concluded a new agreement on climate change, trade, and sustainability, which included tariff elimination on environmental goods.
    

“When the PRC acceded to the WTO in 2001, WTO members expected that the terms set forth in the PRC’s Protocol of Accession would permanently dismantle existing PRC-based policies and practices that were incompatible with an international trading system … But more than two decades later, those expectations have not been realized, and it seems clear that the PRC has no inclination to change. Instead, the PRC has doubled down on its state-led, non-market approach to the economy, to the detriment of workers and businesses in the United States.”

——United States Government opening statement during China’s WTO Trade Policy Review

Race for the White House

Democratic Ticket Shakeup Comes as Republicans Focus on Trade Agenda

• President Joe Biden’s decision to end his bid for a second term and endorse Vice President Kamala Harris has lawmakers, industry officials, and voters seeking to understand the priorities of a new candidate. Barring an unexpected inter-party challenge before the Democratic National Convention, which begins Aug. 19 in Chicago, Harris looks to be on the path to her party’s nomination.
• Harris’ trade policy views have historically been in line with the worker-centric, environmentally-focused agenda pursued by the Biden Administration. As a Senate candidate in 2016, she opposed the Trans-Pacific Partnership negotiated by the Obama Administration. Then, in 2020, she was one of 10 senators to vote against the U.S.-Mexico-Canada Agreement negotiated by the Trump Administration, saying at the time that the deal’s “environmental provisions are insufficient.”
• The shift in the Democratic campaign comes as trade made headlines at last week’s Republican National Convention in Milwaukee. Delegates approved a GOP 2024 Platform calling for revoking China’s Most Favored Nations status and “rebalancing trade” through implementation of baseline tariffs.
• In interviews and speeches, former president Donald Trump and vice-presidential nominee JD Vance pledged to protect American workers through restrictive trade policies.
• Some industry and Congressional leaders, including House Agriculture Committee Chairman “GT” Thompson (R-PA), have publicly expressed concern about potential tariff retaliation on U.S. agriculture.

Spain

US Antidumping and Countervailing Duties on Ripe Olives

• On July 16, The U.S. International Trade Commission (USITC) voted to maintain existing antidumping and countervailing duties (AD/CVD) of ripe olives from Spain in the context of a five-year sunset review of the initial investigation. 
• USITC determined that “revoking the existing antidumping and countervailing duty orders on ripe olives from Spain would be likely to lead to continuation or recurrence of material injury.”
• This will undoubtedly upset interested parties in the European Union, including Spain, who have successfully challenged this U.S. measure at the WTO.
• The disputed measure — 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. The EU argues the measures need to be revoked to come into compliance with the WTO’s recommendations and rulings.
• A final decision is due to the Commerce Department in August.

China

World Trade Organization Trade Policy Review

• The Government of China faced sharp criticism and questioning during its WTO Trade Policy Review — a WTO exercise in which member countries’ trade and related policies are examined and evaluated at regular intervals.
• WTO members had the opportunity to ask China questions based on reports written by the WTO Secretariat and China, which include descriptions of the overall agriculture sector and development trends; trade policies related to agriculture, including intellectual property policies; policy frameworks and initiatives; China’s engagement in multilateral institutions, and more.
• The United States opened its remarks during the meeting by pointing to several things WTO members expected China to change about its trade policies when it first joined the WTO in 2001, but “more than two decades later, those expectations have not been realized, and it seems clear that the PRC has no inclination to change.
• “Instead, the PRC has doubled down on its state-led, non-market approach to the economy, to the detriment of workers and businesses in the United States,” the American statement added.
• Agriculture policy objectives and reforms highlighted by China included strengthening the construction of high-standard farmland, implementing actions to increase grain production capacity by 50 million tons, modernizing agriculture facilities and infrastructure, and building a diversified food supply system to coordinate grain, economic crops, and feed crops.
• The Secretariat Report summarizes China’s trade in agriculture, stating “China continues to be a net importer of agricultural products; agricultural imports represented 8.4% of total merchandise imports in 2023. China’s main agricultural exports … continue to be fruits and vegetables. Import of agricultural products remain dominated by soya beans.”

Regional Trade Agreements

WTO Reviews Four Regional Trade Agreements

• Many WTO members have continued negotiating and approving new trade agreements, which was highlighted during the July 2 meeting of the WTO Committee on Regional Trade Agreements.
• Members reviewed the details of four new Regional Trade Agreements (RTAs):
  • Comprehensive Economic Partnership Agreement between India and the United Arab Emirates (UAE): Enacted on May 1, 2022, the agreement covers the liberalization of trade in goods by 2031 with drastic reductions in tariffs by both nations. The agreement considers the movement of natural persons, investments, intellectual property rights, small and medium enterprises, and digital trade.
  • Comprehensive Economic Partnership Agreement between Indonesia and the Republic of Korea: Enacted on Jan. 1, 2023, the deal liberalizes more than 92% of bilateral tariffs between the two nations by 2042 and strengthens Korea’s commitment to the Association of Southeast Asian Nations (ASEAN). 
  • Free Trade Agreement between the Republic of Korea and Cambodia: Enacted on Dec. 1, 2022, the agreement liberalizes some tariffs; however, most tariffs on agricultural products will remain. The pact also highlights regulatory provisions, including sanitary and phytosanitary measures.
  • Free Trade Agreement between the United Kingdom, Iceland, Lichtenstein and Norway, goods and services:  In the agreement, the nations liberalized tariffs on imports but maintain tariff rate quotas. The language includes provisions on labor and the environment, women’s economic empowerment, electronic commerce, SMEs, and regulatory practices.
• The WTO Secretariat noted seven new notifications of regional trade agreements and that preparation is underway for those reports.
• Additionally, New Zealand, Costa Rica, Iceland, and Switzerland concluded a new agreement on climate change, trade, and sustainability, which included tariff elimination on environmental goods. In a speech on the trade and climate nexus, WTO Deputy Director-General Jean-Marie Paugam called the agreement “groundbreaking.”
• The United States has not approved any new free trade agreements since 2012, other than the U.S.-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement (NAFTA) in 2020.