Recent Developments in Agricultural Trade
Aug 04, 2016
On a calendar year basis, USDA data show that U.S. agricultural exports set a new record in 2014 in nominal value terms, clocking in at $150 billion. Exports fell off from that record level by 11 percent in 2015, and through May of 2016 they are down by another 12 percent as compared to 2015.
Exports play an important role in supporting the U.S. agricultural sector--analysts at USDA’s Economic Research Service calculated that the export share of U.S. agricultural production was 22.2 percent in 2013. Given the relatively soft financial state of the U.S. agricultural sector due to recent commodity price declines, any steps taken to bolster U.S. agricultural exports would be especially helpful at this time.
In the wake of the WTO ministerial meetings held in Nairobi, Kenya last December, negotiators met in late July in Geneva in an effort to maintain the momentum from the agreement on export competition issues by reviving negotiations on the remaining agricultural components of the Doha Round, on market access and domestic support issues. Much of the discussion focused on the insistence of members of the G-33 group of developing countries that they be permitted to raise tariffs above bound levels to protect against import surges under a new Special Safeguard Mechanism (SSM), while agricultural exporting countries refuse to support such a change absent a broader deal on agricultural market access. No progress was made in the negotiations, which will resume in Geneva in October.
Since the last Ministerial meeting, two countries (Liberia and Afghanistan) have formally joined the WTO, bringing the total membership to 164 countries. WTO Director-General Robert Azevêdo from Brazil recently announced that he would seek a second term when his current term expires in September 2017.
The United States is involved in two ongoing WTO dispute settlement cases involving agricultural products. Interestingly, both of them stem from efforts by two different countries to restrict imports of U.S. poultry. The first dispute is with India, from a decision back in 2007 by the government of India to ban poultry imports from any country that had seen outbreaks of avian influenza, regardless of the severity of the strain and the region of the country where the outbreak had occurred. The U.S. won the initial case back in 2014, and is now seeking WTO permission to retaliate against India for what it views as India’s failure to abide by that ruling.
Final U.S. approval of the Trans-Pacific Partnership (TPP) is still pending. The agreement has come under fire by the nominees of both major political parties for President, although the level of public interest and awareness of the deal around the country may be limited. A March 2016 Pew poll found that 49 percent of Americans polled had too little knowledge of the TPP to express an opinion on the deal, while among those who had firm opinions, 30 percent opposed it and 22 percent supported it. The President is required to formally present the deal to Congress for its consideration in order to start the clock under Trade Promotion Authority, a step that has not yet been taken and may not happen at all in 2016.
In June 2016, the U.S. International Trade Commission released its analysis of the impacts of the TPP, finding that by year 15 of the agreement, when most of the market access provisions would be fully phased in, U.S. GDP would increase by $42 billion, creating an additional 128,000 new jobs. Net U.S. agricultural exports would increase by $4.5 billion annually, with most of the gains accruing from dairy products, processed foods, beef, and fresh fruits and vegetables.
U.S. negotiations with the European Union over the TTIP deal continue, although it appears that uncertainty over the path that the U.K. will follow in leaving the EU after June’s Brexit vote has slowed the process even more.
Other Recent Ag Trade Developments
Since the beginning of the year, U.S. negotiators have restored access for U.S. exports of beef to the following countries--Colombia (January), Peru (March), and Saudi Arabia (June). As part of the deal to preserve South Africa’s eligibility for preferences under the African Growth and Opportunity Act (AGOA), the government of South Africa agreed to re-open their market to U.S. beef, pork, and poultry, after years of being blocked.
In July 2016, the U.S. Department of Agriculture announced that a handful of unapproved GMO wheat stalks had been found growing as volunteer plants on the edge of a fallow field in Washington state. USDA had been notified of the problem in June, and had been investigating whether any of the GMO wheat had been harvested and sent to elevators by the farm. In its July announcement, USDA asserted that its investigation had determined that none of the GMO wheat had gone into the food supply. Nonetheless, Japan and South Korea, two major customers for U.S. wheat, are suspending purchases until Monsanto, the company responsible for developing the MON 71700 GMO wheat variety in question, makes available a test to enable importers to detect its presence.