According to former trade ambassador Darci Vetter, there’s no hotter topic in ag right now than trade.
Trade tensions will affect not only our current sales but also our future competitiveness, says Vetter, who now works as general manager, public affairs and vice chair, agriculture food and trade for Edelman.
She advises to track the following:
1. Section 232. This section of the Trade Expansion Act allows the president to modify imports though tariffs if they threaten national security. Such was the justification for a 25% tariff on steel and 10% on aluminum.
“The thing to watch is the second Section 232 investigation, which looks at whether foreign automobiles and auto parts should be considered a threat to national security and therefore subject to tariffs. Those tariffs would cover $300 billion of imports, and with trade partners such as the EU [European Union], Canada, Mexico, Japan and Korea, that same level of U.S. exports could be subject to future retaliation,” she says.
2. Section 301. The U.S. is using this rule of the Trade Act of 1974 to try to address China’s intellectual property practices.
“This is about China’s behavior, their protection, or lack thereof, of intellectual property,” Vetter says. “These are not good practices, and previous administrations have engaged with China to curb them.”
She explains related Chinese tariffs came in two waves: $50 billion on intermediate goods, then this fall 10% tariffs went into effect on more than 5,700 products. But those 10% tariffs will increase to 25% Jan. 1, 2019.
3. Free Trade Agreements. While the U.S. deals with the U.S.-Mexico-Canada Agreement, former trade partners reached their own agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership among 11 countries, Vetter notes. “As those agreements around us come together, our products will be less competitive,” she says.
Even if tariffs disappear, the U.S. will be competing with new acres and facilities worldwide, Vetter adds.
For the full interview with Darci Vetter: