Tag Archives: Trade

The Trump Administration included a range of agricultural demands in its list of formal objectives for trade talks with the European Union. That list came out late last week when EU Trade Commissioner Cecilia Malmstrom was in Washington to visit with U.S. Trade Representative Robert Lighthizer.

Malmstrom reiterated last week that the EU will not be negotiating on agriculture. However, Reuters notes that if a wide-ranging trade deal is to be accomplished, something will have to give. The administration wants to bring down tariff and non-tariff barriers to U.S. agricultural goods that are a result of European skepticism about American agricultural practices, especially biotechnology. Agriculture has been a big sticking point in recent attempts to establish a trade deal between the U.S. and EU.

Malmstrom told reports after the meeting with Lighthizer that the parameters of the discussions haven’t been decided yet. The USTR push to crank up full-fledged negotiations comes after a meeting in December with ag groups that pushed hard for their products to be included in the discussion. Now that the U.S. objectives have been made public, the USTR could be ready to start negotiations as soon as 30 days from now.

American Farm Bureau policy experts talked trade during a workshop at the organization’s 100th annual convention. Farm Bureau will be keeping an eye on a lot of things this year when it comes to trade.

Dave Salmonsen is the organization’s senior director of congressional relations. He says the diverse impact of tariffs, the outcomes of free trade agreement negotiations, and the future relationship between the U.S. and China are all factors critical to growing exports in the future. Salmonsen talked about the new U.S.-Mexico-Canada Trade Agreement and said the ratification process “could be quick or it could be slow, but there’s a timeline that has to be followed.” Salmonsen said the U.S. has also begun trade negotiations with Japan, the European Union, and the United Kingdom.

Trade negotiations between the U.S. and China are still ongoing. Farm Bureau economist and director of congressional relations Veronica Nigh was also on stage and talked about the economic impact of trade and tariffs. “95 percent of the world’s population is outside the U.S., so export markets are always our best opportunity for growth,” Nigh says. Overall, 20 percent of U.S. agricultural products are exported.

China and the United States will continue their vice ministerial-level trade talks in Beijing for a third day on Wednesday, a U.S. official said, as financial market players closely watch the outlook for the trade dispute between the world’s two major powers.

The official was speaking to reporters late Tuesday following two days of talks in which Washington is believed to have called on Beijing to implement measures to protect intellectual property rights and increase imports of U.S. products.

Details of the talks were not immediately available, but U.S. President Donald said in a Twitter post, “Talks with China are going very well!”

The direct dialogue on trade between the world’s two largest economies came around one month after Chinese President Xi Jinping and Trump held a summit.

At their meeting on Dec. 1 in Buenos Aires, Xi and Trump agreed that the United States and China will hold off on imposing further tariffs on each other’s imports and try to complete talks on technology and intellectual property rights issues within 90 days.

The Trump administration warned at the time that “if at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent,” suggesting that a failure to finish negotiations will rekindle trade strains.

Amid escalating U.S.-China trade tensions, global stock markets have recently become shaky and concern has been mounting that the world economy would be weighed down by a slowdown of the Chinese and U.S. economies.

Beijing and Washington hope the latest talks will pave the way for a ministerial-level meeting that U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, Xi’s economic adviser, will attend, sources close to the matter said.

The United States has so far imposed tariffs of up to 25 percent on $250 billion of Chinese imports, with Trump urging Beijing to curb its huge trade surplus with the United States and improve the country’s alleged unfair business practices.

In retaliation, China has levied tariffs on more than 80 percent of all U.S. imports.

The second day of the vice ministerial-level trade talks coincided with North Korean leader Kim Jong Un’s unexpected arrival in Beijing on Tuesday.

Chinese Foreign Ministry spokesman Lu Kang told reporters later in the day that the holding of the two diplomatic events on the same day was unintentional.

In another sign of progress, China’s farm ministry has newly approved the import of five genetically modified crops, local media said on Tuesday, with the United States putting pressure on the Asian nation to open up its agricultural market further.

There was a modest drop in agricultural producer sentiment in December as farmers’ perception of both current and future economic conditions weakened, according to results from the Purdue University/CME Group Ag Economy Barometer. The December barometer reading of 127 was 7 points lower than November. The barometer is based on 400 survey responses from agricultural producers across the country.

Both of the barometer’s two sub-indices declined in December: the Index of Current Conditions fell 6 points to 109, and the Index of Future Expectations fell 8 points to 135. When comparing these readings to December 2017, the Index of Current Conditions is substantially lower, registering a decline of 30 points, while the Index of Future Expectations actually improved from year-to-year with an uptick of 15 points.

“Over the course of the last year, producers’ impression of current economic conditions on their farms has declined markedly” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “But at the same time their expectations for future economic conditions have held steady,” said Mintert. “As a result of this mixed view, farmers appear to be cautious about making large investments in their farming operations.”

For example, in December 2018 the Large Farm Investment Index, which measures whether producers feel this is a good time to make large farm investments, fell 5 points to a reading of 51. This marked a 29 point drop from one year ago when it reached a reading of 70. Those same concerns were also apparent when producers were asked whether now is a “good time” or “not a good time” to bring a new generation of family into the business. Just 42 percent said now was a “good time” compared to approximately half during the previous two years. However, when looking ahead 5 years, 65 percent of producers expect conditions to be more favorable to onboarding a new generation.

International agricultural trade issues continue to cause concern and could be causing producers’ reduced confidence in current economic conditions. When producers were asked whether they expect exports to increase or decrease in the next five years, 59 percent indicated that they expect ag exports to increase, down 7 points from November’s survey response, whereas 26 percent expect ag exports to decrease, up from 10 percent on the November survey.

Read the full December Ag Economy Barometer report at http://purdue.edu/agbarometer. This month’s report includes additional information about farmers usage of and perceived value of incorporating drone technology into their farm’s operation as well as their production expectations for the pork, beef, and dairy industries. Each month Dr. Mintert also provides an in-depth analysis of the barometer. That video is available at http://purdue.edu/agbarometer.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.

Trade talks between the U.S. and China this week should provide an early indication as to what political tensions between the two nations may disrupt the talks.

Deputy U.S. Trade Representative Jeff Gerrish will meet with Chinese officials in Beijing to begin discussing measures the U.S. seeks to allow the current trade war end between the two. If the talks are favorable to the U.S., Politico reports that could lead to higher level talks with higher ranking officials. The U.S. has set a March deadline for China to agree to trade policy reforms.

Meanwhile, China is opening access to its economy back to the United States through purchases of U.S. agricultural products. The state of the Chinese economy is seen as dire by some analysts, which could be a motivation to seek an end to the trade war. However, it remains unclear what specific demands the Trump administration will make and if China deems them reasonable or not.

American envoys are due in Beijing for talks Monday in a tariff battle over Chinese technology ambitions that threatens to hobble global economic growth.

The two days of meetings are aimed at carrying out the Dec. 1 truce by Presidents Donald Trump and Xi Jinping that postponed additional tariff hikes, the Ministry of Commerce announced Friday. It said the American delegation will be led by the deputy U.S. trade representative, Jeffrey Gerrish, but offered no other details.

The talks are going ahead despite tension over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions on Iran.

The two governments express interest in a settlement but give no indication their stances have shifted.

They hope to have “positive and constructive discussions,” said a Chinese foreign ministry spokesman, Lu Kang.

The clash reflects American anxiety about China’s emergence as a competitor in telecoms, solar power and other technologies and complaints by Washington, Europe and other trading partners that Beijing’s tactics violate its market-opening obligations.

Trump wants Beijing to roll back initiatives including “Made in China 2025,” which calls for state-led creation of champions in robotics, artificial intelligence and other fields. American officials worry those might erode U.S. industrial leadership.

China’s leaders have offered to narrow its politically sensitive trade surplus with the United States by purchasing more soybeans, natural gas and other American exports. But they reject pressure to scrap technology initiatives they see as a path to prosperity and global influence.

Both governments face economic pressure to reach a settlement.

Chinese economic growth fell to a post-global crisis of 6.5 percent in the quarter ending in September. Auto sales tumbled 16 percent in November over a year earlier and weak real estate sales are forcing developers to cut prices.

Third-quarter U.S. growth was 3.4 percent and unemployment is at a five-decade low. But surveys show consumer confidence is weakening due to concern growth will moderate this year.

Beijing has tried in vain to recruit France, Germany, South Korea and other governments as allies against Trump. They criticize his tactics but echo U.S. complaints about Chinese industrial policy and market barriers.

The European Union filed its own challenged in the World Trade Organization in June against Chinese regulations the 28-nation trade bloc said hamper the ability of foreign companies to protect and profit from their own technology.

Washington has imposed punitive tariffs of up to 25 percent on $250 billion of Chinese goods. Beijing responded by imposing penalties on $110 billion of American goods, slowing down customs clearance for U.S. companies and suspending issuance of licenses in finance and other industries.

Trump and Xi agreed to a 90-day postponement of more tariff hikes due to take effect Jan. 1. But economists say that is too little time to resolve the sprawling disputes that bedevil U.S.-Chinese relations.

The decision to hold this week’s talks at a deputy minister level reflects the need to work out technical details before higher-level officials make “hard political decisions on major issues,” said Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.

In addition to Gerrish, the U.S. team will include the Office of the U.S. Trade Representative’s top negotiator on agricultural issues, Gregg Doud; Treasury Under Secretary for International Affairs David Malpass; Commerce Under Secretary for International Trade Gilbert Kaplan; the U.S. Agriculture Department’s under secretary for trade and foreign affairs, Ted McKinney; the U.S. Department of Energy’s assistant secretary for fossil energy, Steven Winberg; and other senior officials.

The makeup of the U.S. team was announced Friday by the trade representative’s office.

The dispute has rattled companies and financial markets that worry it will drag on global economic growth that is showing signs of declining.

For their part, Chinese officials are unhappy with U.S. curbs on exports of “dual use” technology with possible military applications. They complain China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

Chinese exports to the United States held up through late 2018 despite Trump’s tariff hikes. But that was due partly to exporters rushing to beat new duties — a trend that is fading.

Some manufacturers that serve the United States have shifted production to other countries.

The investment bank UBS said Friday that 37 percent of 200 manufacturers surveyed said they have shifted out of China over the past 12 months. It said the threat of U.S. tariff hikes was the “dominating factor” for nearly half, while others moved due to higher costs or tighter environmental regulation.

Another 33 percent of companies said they plan to move out of China in the next six to 12 months, according to the UBS report.

Despite the December truce, “most firms expect trade war to escalate,” the report said.

While U.S. soybean sales to China suffered in 2018, they’re making some headway across the Atlantic Ocean. On the 50th anniversary of the soybean industry’s development efforts in the European Union, the United States has outpaced Brazil as the number one supplier to the continent.

The website U.S. Soy Dot Org says America is also the top soybean supplier to the Middle East and North Africa. Farmers and industry officials say the challenge is to make sure the growth that began as a result of the trade dispute with China keeps going in the right direction. Brazil soybeans are currently fetching a big premium. Government data says Brazil soybeans are getting $89 per metric ton more, on average, than U.S. oilseeds were last month, due to Chinese demand. A drought also dramatically cut production and meal output in Argentina, the world’s top exporter in 2017.

As a result, U.S. soybeans and meal exports are up 243 percent and 105 percent, respectively, to Europe and the Middle East/North Africa regions. Countries like Egypt, Spain, Saudi Arabia, and many others have either increased their soybean purchases or have become new customers.

A large trade deal comprised of 11 nations became official on Sunday, December 30th after years of back-and-forth talks.

A Straits Times Dot Com article says the first six countries to ratify the pact are now enjoying steep cuts in tariffs. Consumers in countries like Singapore and Japan will benefit from the pact, called the Comprehensive and Progress Agreement for Trans-Pacific Partnership. For example, a Japanese retailer has already cut the price of Australian beef at its supermarkets.

Australia’s Prime Minister, Simon Birmingham, says the opportunities for his country are extensive. “They range from more Victorian wine and cheese being enjoyed on the slopes of Canada to more New South Wales prime beef being served up in Japanese restaurants.” Singapore’s Trade and Industry Minister says the country’s businesses will enjoy a lot more access to markets across the region. In a statement, the Minister says, “We’re looking forward to the rest of the participants ratifying the agreement so the full force of the pact can go into effect.”

The trade deal was led into existence by Japan. It contains all but just 22 of the more than 1,000 original provisions in place before the U.S. pulled out in the early days of the Trump Administration.

USDA is moving forward on the second and final round of trade mitigation payments to farmers hurt from retaliation by America’s trading partners. Commodity producers are now eligible to receive Market Facilitation Payments on the second half of their 2018 production. USDA has been sending out the first round of MFP payments to producers since September on the first 50 percent of their 2018 production.

The MFP payments are designed for almond, cotton, corn, dairy, hog, sorghum, soybean, fresh sweet cherry, and wheat producers. Producers are only required to register one time for both the first and second round of payments. The MFP signup period runs through January 15, 2019, but producers actually have until May 1 to certify their 2018 production numbers.

Farmers who haven’t done so can find signup information and instructions at www.farmers.gov/mfp. Eligible producers must wait until harvest is completely finished as payments are made based on 2018 total production. Farmers that have already applied, completed harvest, and certified their production, will receive a second payment on 50 percent of their production, multiplied by the MFP rate for each commodity.

WASHINGTON – The U.S. Department of Agriculture (USDA) forged ahead to expand export opportunities and diversify markets for U.S. farm and food products in 2018, and those efforts paid off with global sales remaining robust despite numerous challenges in the international trade arena.

“It’s been a rollercoaster ride this year, but U.S. farm exports remain strong, thanks in no small part to the efforts of USDA’s Foreign Agricultural Service (FAS),” said Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney. “Under the leadership of Administrator Ken Isley, who joined the agency in March, FAS has been instrumental in the Administration’s efforts to promote free, fair and reciprocal trade.”

One of the year’s highlights was the successful negotiation of the U.S.-Mexico-Canada Agreement (USMCA), through which the United States strengthened its trade relationship with its North American neighbors.

“Dozens of experts from across FAS worked side-by-side with our partners in the Office of the U.S. Trade Representative to ensure the best deal for U.S. agriculture, ultimately ensuring preferential access for U.S. exports and solidifying commitments to fair and science-based trade rules,” McKinney noted.

In addition, USDA efforts to break down barriers and pursue export opportunities resulted in new or expanded market access for numerous U.S. farm products in 2018. These included dairy and poultry to Canada under the USMCA, as well as lamb and goat meat to Japan, beef and pork to Argentina, poultry to India and Namibia, lamb to El Salvador, beef and poultry to Morocco, eggs to South Africa and dairy to Turkey.
 
FAS staff around the globe also assisted U.S. exporters in releasing hundreds of shipments that were detained at foreign ports. USDA’s intervention ensured that more than $77 million of perishable U.S. products arrived safely at their final destinations. Among them were beef to Bulgaria, cherries to Taiwan, cranberries to China, lobsters to the United Arab Emirates and squid to Peru.

“In addition to these trade policy successes, we continue to focus our efforts on trade promotion, cultivating relationships with overseas customers and helping U.S. businesses get their products into new markets,” McKinney said.
 
As part of that effort, FAS sponsored six agricultural trade missions in 2018, enabling more than 200 U.S. companies and organizations to engage in 3,000 one-on-one meetings with foreign buyers, generating more than $140 million in projected 12-month sales.

Similarly, USDA organized exporter participation in 19 trade shows around the globe, where more than 900 U.S. companies introduced 4,500 new products to potential customers and reported $296 million in on-site sales and $2 billion in projected 12-month sales.

“From Central America, to Southeast Asia, to Sub-Saharan Africa, it’s been gratifying to witness the world’s receptiveness to U.S. farm and food products. Consumers worldwide have a true affinity for the American brand and immediately recognize the safety and quality of our products,” said McKinney.

To further strengthen those trade promotion efforts, FAS rolled out the Agricultural Trade Promotion Program, which will provide $200 million to mitigate the effects of other countries’ trade barriers by helping U.S. agricultural exporters develop new markets. A total of 71 organizations applied for the new program, submitting requests totaling more than $600 million.

“In addition to pursuing these near-term opportunities, we continue to engage in what we call trade capacity building. That’s where we’re taking the long view – looking down the road to where the markets might be in the future, and then engaging leaders in those markets who can help develop sound policies and strong agricultural sectors,” McKinney noted.

Under the trade capacity-building umbrella, FAS international fellowship and exchange programs enabled 569 foreign researchers, policymakers, and agricultural specialists from 56 lower- and middle-income countries to work alongside U.S. mentors and trainers this year, acquiring knowledge and skills to help build their countries’ agricultural sectors and increase their ability to engage in global trade. 

FAS also helped numerous developing countries strengthen their agricultural systems, focusing on issues such as animal disease control, agricultural data collection and reporting, and development of national sanitary and phytosanitary standards.

“We like to say that we’re leaving no stone unturned in our efforts to seek out new market opportunities and improve our export prospects in existing markets,” McKinney said. “In that regard, we’re looking forward to great things in 2019, including the pursuit of even stronger trade ties with partners such as Japan and the United Kingdom, the forging of new business relationships through seven agricultural trade missions, and further success in knocking down both tariffs and non-tariff barriers to trade.”