Trade Negotiations, Policy Implementation Continue Amid COVID-19

Despite the travel restrictions and market disruptions wrought by COVID-19, trade policy work continues. The U.S. Grains Council (USGC) regularly interacts with importers and collaborates with farmers, agribusiness and government officials on these issues, seeking to open new opportunities for feed grain products while protecting existing access offered by free trade agreements, bilateral deals and the World Trade Organization (WTO).

USMCA Implementation Takes Next Steps

The United States completed the final step for the United States–Mexico–Canada Agreement (USMCA) when U.S. Trade Representative Robert Lighthizer notified the U.S. Congress on April 24 that Canada and Mexico have made the necessary steps to fulfill their commitments under the deal. USMCA is now expected to enter into force on July 1, 2020.

The agreement provides assurance of continued access to two of the largest markets for U.S. coarse grains and co-products. In the 2018/2019 marketing year, Mexico was the top export destination for U.S. corn, barley/barley products and dried distiller’s grains with solubles (DDGS); the third largest buyer of U.S. sorghum; and the 10th largest market for U.S. ethanol. Canada ranked as the second largest buyer of U.S. ethanol and U.S. barley and barley products; fifth largest buyer of U.S. corn; and seventh largest buyer of U.S. DDGS.

USMCA includes several important advantages for the agricultural sector, including:

  • maintaining zero tariffs on U.S. coarse grains, co-products and ethanol;
  • providing the highest enforceable sanitary and phytosanitary standards in any trade agreement to date;
  • addressing regulatory equivalence, science and risk analysis, transparency and cooperative technical consultations;
  • creating a rapid-response mechanism to address trade challenges;
  • modernizing border procedures; and
  • adding an enforceable biotechnology chapter – the first ever in a U.S. trade agreement.

U.S.-UK Negotiations Begin

The United States and the United Kingdom started virtual trade talks on May 5 when the parties formally began online negotiations. The online meetings, which include more than 200 negotiators organized into nearly 30 different negotiating groups, are scheduled to continue through May 15.

Lighthizer and United Kingdom Secretary of State for International Trade Elizabeth Truss issued a joint statement, stating: “An FTA is a priority for both countries, and we share a commitment to secure an ambitious agreement that significantly boosts trade and investment. We will undertake negotiations at an accelerated pace and have committed the resources necessary to progress at a fast pace.”

The Council submitted its negotiating objectives to USTR prior to the negotiations, requesting that U.S. government demand the UK eliminate the price reference system and commit to maintaining zero duties on U.S. corn, barley, sorghum, ethanol, DDGS and other co-products. In addition, the Council suggested USTR should encourage the UK to establish regulatory autonomy from the European Union system to regulate both biotechnology and new plant breeding innovations and techniques as well as establish its own independent policies and regulations on crop protection products.

Comments Submitted On Kenya FTA

On April 15, the Council submitted joint comments with the National Corn Growers Association (NCGA) and Corn Refiners Association (CRA) on negotiating objectives for the proposed U.S.-Kenya trade agreement.

The groups highlighted the need to eliminate Kenya’s ban on imported biotechnology products; phase out tariffs on grains, corn co-products and ethanol; and support chapters on sanitary issues and biotech restrictions through language similar to that in USMCA.

The Council is working with Kenyan feed manufacturers to develop the domestic feed industry through association capacity building, industry development and alternative feed promotion. The Council is also using the Quality Samples Program (QSP) to ship containers of U.S. DDGS and sorghum to East Africa for commercial trials – opening the doors for a strong commercial linkage between the United States and Kenya.

Negotiations With China Continue

For more than 35 years, the Council has worked to help customers and other stakeholders in China improve their operations and advance China’s food security, safety and agricultural sustainability through trade.

On a much larger scale, China has committed to large purchases of U.S. sorghum and significant purchases of U.S. corn across the 2019/2020 and 2020/2021 marketing years, providing much-needed positive demand news for U.S. farmers. An importer who participated in a 2019 USGC trade team also secured a tariff exemption for U.S. barley malt as part of an addition to the Phase 1 agreement, already leading to small-scale sales. The United States and China also agreed to a new importing protocol for U.S. barley.

The Council continues to support the advancement of other structural changes in the Phase 1 agreement that should provide even more access to the Chinese market over the long term.

U.S-India Trade Hope To Advance

The U.S. government continues to engage with the Indian government through diplomatic exchanges to complete trade negotiations on a number of policy issues, including providing market access to U.S. DDGS and ethanol.

In February, President Trump’s visit to India was viewed as symbolic but demonstrated the vast base of positive goodwill in India for the United States. Earlier this week, Indian Ambassador to the United States Taranjit Singh Sandhu expressed confidence the United States and India will have an initial trade deal before the end of the year, which could pave the way toward a larger trade agreement.

One of the irritants stalling the overall negotiation process has been the U.S. withdrawal of India’s eligibility under the Generalized System of Preferences (GSP) program, which provides preferential trade treatment for developing countries on a limited amount of trade goods and services.

The Council continues to work closely with U.S. government officials on efforts to allow U.S. DDGS access into India’s deficit feed market and to allow U.S. ethanol to be imported as a fuel in addition to industrial purposes.

Keep track of developments on trade policy with the Council.