ARLINGTON, VA – The Office of the U.S. Trade Representative (USTR) yesterday accepted a petition from the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) to examine India’s failure to follow through on its obligations to provide “equitable and reasonable access to its market” for dairy products. In addition, Indonesia, which has also been pursuing dairy trade distorting policies, will be included in USTR’s review to assess that country’s compliance with its market access obligations.
India has for many years maintained unjustified market access barriers to U.S. dairy products, despite receiving preferential access to the U.S. market under a special duty-free trade arrangement called the Generalized System of Preferences (GSP). India abruptly began denying dairy exports in 2003, citing safety concerns and demanding revised government-issued health certificates. The U.S. industry and U.S. government have worked in good faith over the last 15 years to remove this intractable barrier, but have been met with a shifting litany of demands not founded on sound science.
Meanwhile, since last year Indonesia has been advancing a policy aimed at mandating that importers and manufacturers in its country purchase local milk or contribute monetarily to support the local dairy industry, even though this runs counter to its WTO commitments.
GSP benefits come with the expectation that the trading partners using the program comply with a baseline level of requirements, including those related to reasonable market access terms. USTR has rightfully determined that a thorough examination of these countries’ adherence to these terms of the deal is necessary.
Industry officials praised USTR’s decision to review India’s and Indonesia’s GSP status, and are hopeful that the move will force the countries to halt unfair trading practices that harm U.S. farmers.
“Dairy farmers across the country applaud the White House and USTR for taking this step and holding these countries accountable for their unlawful actions,” said NMPF President and CEO Jim Mulhern. “We’ve been wrongly blocked from the Indian market for more than a decade, and Indonesia has recently been heading down a similar route. If these nations refuse to embrace free and fair trade, there must be consequences.”
“We export dairy products to more than 100 countries and our products are universally recognized as safe,” explained Tom Vilsack, USDEC president and CEO and former U.S. Secretary of Agriculture. “Exports are essential to rural America’s future, and our government must prioritize the removal of trade impediments like this to foster an open and healthy market.”
The two organizations thanked the Trump Administration for sending a strong message that trade should be a two-way street. They said USTR has the opportunity to lead on other key dairy trade issues, such as tearing down policies erected by Canada that are harming U.S. dairy exports and run counter to what is needed from a modernized North American Free Trade Agreement.
USTR indicated that a public hearing and comment period for the new GSP reviews of India and Indonesia will be announced in an upcoming Federal Register notice.
ANKENY, Iowa — Bill Shipley, Iowa Soybean Association president, delivered the following speech at Governor Reynolds’ press conference at the Iowa State Capitol Tuesday, April 10. Shipley grows soybeans, corn and hay near Nodaway, Iowa.
“To say China matters to U.S. soybean farmers would be an understatement.
“China is the world’s largest consumer of soybeans. The United States supplies roughly 40 percent of China’s annual soybean imports, valued at almost $14 billion.
“That said, soybean farmers recognize there are legitimate trade issues that must be resolved between the two countries. They include intellectual property rights and requirements placed on U.S. companies wanting to do business in China. The ag industry acknowledges the importance of these matters and encourages their swift resolution.
“We believe this can be done absent targeting food and agricultural trade. Exports of U.S. soybeans, beef, pork and other commodities provides a trade surplus for our country. Encouraging more of it is advantageous for both countries. Agricultural trade boosts jobs and economic activity in America while reducing the economic trade imbalance existing between China and the U.S.
“China’s proposal to add tariffs on soybeans adds to the uncertainty U.S. farmers face as we prepare to head to the fields to plant another crop. Longer-term, we’re concerned about the establishment of anti-American sentiment in China. If allowed to take hold, it could jeopardize the ability of U.S. farmers to do business in China for generations.
“Trade wars involving food are a lose-lose. Here at home, Iowa soybean farmers would be negatively impacted by higher input costs and lower market prices. Chinese consumers would lose a reliable supplier and pay more for soybeans due to reduced competition.
“I invite President Donald Trump to my farm to see and experience soybean planting season in Iowa. He will meet the farmers who help create one of America’s most valuable exports, contributing to jobs and economic activity here at home and improved human health throughout the world, including China. It’s a discussion we welcome as we work to resolve this matter to the benefit of America and China.
“The Iowa Soybean Association urges U.S. and Chinese officials to pivot from the politics and posturing to resolving this escalating trade dispute for the benefit of American farmers and our Chinese customers.”
WASHINGTON D.C.-Treasury Secretary Steven Mnuchin says the Trump administration is talking with Chinese officials and is willing to negotiate to resolve the trade dispute. But he says President Donald Trump will remain steadfast on protecting U.S. economic interests.
Mnuchin tells CNBC, “We’re absolutely willing to negotiate.” Mnuchin says in the interview that U.S. officials are in communication with the Chinese. But he adds, “On the other hand, the president is absolutely prepared to defend our interests.” He says those interests include protecting U.S. farmers.
The treasury secretary acknowledges that the escalation of tensions between the two countries has brought “the potential of a trade war.” But he says the current standoff is not the beginning of a trade war, and that he’s “cautiously optimistic that we’ll be able to work this out.”
China is moving forward with retaliatory tariffs on U.S. products, including the 25 percent tariff on U.S. pork. China’s Ministry of Finance announced Sunday it will suspend duty reductions on select imported goods from the United States.
In the announcement, China says the Trump administration’s steel and aluminum imports to the U.S. violate World Trade Organization rules, and “did not comply with the security exceptions provision.” China alleges the move by trump caused “serious damage” to China’s interests. China is targeting U.S. items, including fruits, along with the 25 percent tariff on U.S. pork.
China says the nation is using its action as a method to “safeguard its interest,” as allowed by WTO rules. Last week, China’s Ministry of Finance said the action by the U.S. had “severely damaged” the multilateral trade system. China also made a World Trade Organization filing last week to seek consultations regarding the issue.
HOSPERS, Iowa (AP) — In Sioux County, where swine barns interrupt the vast landscape of corn-stubbled fields, exports of meat, grain and machinery fuel the local economy. And there’s a palpable sense of unease that new Chinese tariffs pushed by President Donald Trump — who received more than 80 percent of the vote here in 2016 — could threaten residents’ livelihood.
The grumbling hardly signals a looming leftward lurch in this dominantly Republican region in northwest Iowa. But after standing with Trump through the many trials of his first year, some Sioux County Trump voters say they would be willing to walk away from the president if the fallout from the tariffs causes a lasting downturn in the farm economy.
“I wouldn’t sit here today and say I will definitely support him again,” said 60-year-old hog farmer Marv Van Den Top. “This here could be a real negative for him.”
Last week, Trump announced plans to impose tariffs on a range of Chinese goods, a move aimed at punishing Beijing for stealing American technology. The Chinese government responded with a threat to tag U.S. products, including pork and aluminum, with an equal 25 percent charge.
That sent a chill through places like Sioux County, which ranks first among Iowa’s 99 counties in agricultural exports. In 2016, the county sold $350 million in meat, grain, machinery and chemicals overseas. Far closer to the sparsely populated crossroads of South Dakota and Minnesota than Iowa’s bustling Des Moines metro area, Sioux County is home to just 34,000 people, but more than 1 million hogs, 6 million chickens and nearly as impressive numbers of cattle and sheep.
Brad Te Grootenhuis sells about 25,000 hogs a year and could lose hundreds of thousands of dollars if the tariffs spark a backlash from China. He said it’s possible he would abandon Trump if pork’s price decline continues and lasts.
“Any time you’re losing money, nobody’s happy,” the 42-year-old farmer said. “I’ve got payments to make, plain and simple.”
Nationally, opinions on Trump’s tariffs, which were a central part of his campaign pledges to get tough on China, are mixed.
Although GOP congressional leaders have argued tariffs would prompt a trade war and have urged Trump to reverse course, 61 percent of Americans who identify as Republicans nationwide favor a tariff, according to a national poll taken this month by The Associated Press-NORC Center for Public Affairs Research. Still, 39 percent of Republicans say it will lead to a decrease in jobs, according to the poll, compared to 32 percent who think it will lead to an increase. That’s similar to the views of all voters, the survey shows.
Countermeasures by China, which is second only to Canada in importing Iowa products, could cause pain across the American agricultural sector, according to economists. For instance, a pork tariff imposed by China, which spent $42 million on Iowa pork products in 2017, would back up the Iowa market and force prices sharply downward.
“Retaliatory tariffs from China would have a devastating impact on U.S. agricultural exports, especially if they focus on products like soybeans and hogs,” said Adam Kamins, a senior economist at Moody’s Analytics. “This puts northwest Iowa and the Great Plains more broadly on the front line in a trade war.”
For hog farmer Tim Schmidt, the fallout of a geopolitical spat with China would force him to hold off on any new construction or maintenance on the decades-old buildings on his family-run farm along the Missouri River.
“There is an uncertainty to exactly what the next two to three years are going to look like,” Schmidt said. A Trump voter in 2016, Schmidt said that if “things are bad and someone better comes along, we’re willing to take a look.”
Sioux County seed dealer Dave Heying echoed a common refrain that any downturn in the farm economy would curb spending throughout the local economy, with direct impact on farm machinery dealers, mechanics and agricultural construction, among other businesses.
“Protecting our U.S. industries is important, but my concern is, at what expense to the farmer?” Heying said of Trump’s trade moves. “It is too early to say whether or not I would support him. These types of decisions give you hesitation.”
As a presidential candidate, Trump was a somewhat awkward fit for Sioux County, where a third of its residents are members of the Dutch Reformed Church of America, which holds strictly conservative social positions. In striking contrast, the bombastic New Yorker has been married three times and shadowed by allegations of sexual harassment and infidelity.
Trump finished fourth in Sioux County in Iowa’s Republican presidential caucus, but carried 81.3 percent of the vote in the general election, his second-highest county share in the state. And a large core of voters in Sioux County, where Franklin Roosevelt was the last Democratic presidential candidate to win, remains with Trump, even if the farm economy suffers as a result of his trade policies.
“You have to have faith in our innovation and entrepreneurialship in this country,” said Ed Westra, a grain cooperative manager and Trump devotee. “You’ve got to think of the big game.”
(Washington, D.C., ) – U.S. Secretary of Agriculture Sonny Perdue issued the following statement today regarding the agreement in principle reached by U.S. Trade Representative Robert Lighthizer and Republic of Korea Minister for Trade Hyun Chong Kim regarding modifications to the U.S.-Republic of Korea Free Trade Agreement (KORUS):
“I applaud President Trump, Ambassador Lighthizer, and the U.S. trade team for partnering with the Republic of Korea to modernize KORUS and protect the strong agricultural components that were built into the pact. Korea has long been an important trading partner for U.S. agriculture and currently ranks as our 6th-highest value market. U.S. agricultural exports to the country have increased 95 percent over the past decade and we look forward to continued growth. Through this new agreement in principle, progress was also made with regard to Korea’s customs verification procedures, which have been a substantial concern related to exports of U.S. agricultural and industrial goods.”
MCCOOK, NEB. – U.S. Senator Deb Fischer (R-Neb.), a member of the Senate Agriculture Committee, released the following statement today on the administration’s announcement of an important trade deal with South Korea:
“I am pleased to see the administration has made a good trade deal with South Korea. This is a step in the right direction that will expand opportunities for our producers and the state of Nebraska. I have been outspoken about the value of the South Korean market to Nebraska’s high-quality agriculture products. That is why, in September, I began advocating to stay in the KORUS FTA and visited with both U.S. administration officials and South Korea officials to stress the importance of the trade relationship between our two countries.”
– On September 26, 2017, Senator Fischer met with South Korea’s Trade Minister Kim Hyun-chong on the KORUS FTA.
– On September 5, 2017, Senator Fischer wrote a letter a letter to President Donald Trump urging him not to terminate the KORUS FTA.
Key Nebraska Ag Stats
South Korea was Nebraska agriculture’s fifth-largest customer in 2016. South Korea imported $340 million of Nebraska agricultural products that year. Click here for more information.
Steel and aluminum tariffs crafted by the Trump administration based on national security have “severely damaged” the multilateral trade system, according to officials from China.
In a translated news release, a Chinese trade official says the nation will take legal actions through the World Trade Organization to “maintain the stability and authority” of multilateral trade. The comment came late last week as China announced a list of 128 products to target in retaliatory measures, including U.S. soybeans and pork. China made a World Trade Organization filing Monday to seek consultations regarding the issue.
China calls the move by the U.S. a “safeguard measure” as outlined in WTO rules. Being the two biggest economies in the world, China says the U.S. and China must “focus on cooperation” to promote trade relations between the two countries.
The first flight of tariffs from China focuses on fruit, wines and ethanol, among other products, worth an estimated $1 billion. The second flight, should China move forward, covers pork, recycled aluminum, and other products.
Despite threats of retaliation from China over U.S. plans to impose tariffs on up to $60 billion in Chinese goods, Treasury Secretary Steve Mnuchin on Sunday said President Donald Trump had no intention of backing down and was not worried about a trade war, according to Rueters.
“We are going to proceed with our tariffs. We’re working on that,” Mnuchin told Fox News Sunday. “So, as President Trump said, we’re not afraid of a trade war, but that’s not our objective.”
Fears of a trade war between the United States and China have sent U.S. stock prices tumbling. The Dow Jones Industrial Average and the S&P 500 both lost nearly 6 percent by the end of last week.
A presidential memorandum signed by Trump last week will target up to $60 billion in Chinese goods with tariffs over what his administration says is misappropriation of U.S. intellectual property, but only after a 30-day consultation period that starts once a list is published.
Trump gave the Treasury Department 60 days to develop investment restrictions aimed at preventing Chinese-controlled companies and funds from acquiring U.S. firms with sensitive technologies.
Mnuchin said he believed the United States could reach an agreement with China on some issues, but said the tariffs would not be put on hold “unless we have an acceptable agreement that the president signs off on.”
China has urged the United States to “pull back from the brink” on the tariffs and threatened to retaliate by hitting U.S. agricultural exports.
Republican Senator Joni Ernst of Iowa, a major exporter of farm products to China, said on the CBS program “Face the Nation” on Sunday that hers and other Midwestern states would be harmed by any retaliation.
Iowa is the top U.S. state for hog production. China imports more than a third of all U.S. soybeans.
“Nobody wins in a trade war,” she said. “So if they start retaliating, we will see significant impact – very detrimental impact not just in Iowa, but across the Midwest as well,” she said.