Global trade markets are constantly evolving, and in recent years, President Trump and the office of the United States Trade Representative (USTR), led by Robert Lighthizer, have acted to update current agreements and address bad-faith actions of our country’s trading partners. These actions include imposing tariffs on solar panels, washing machines, steel and aluminum, automobiles and other products. The tariffs have led the U.S. into a global trade war and induced market uncertainty and anguish. In many cases, trading partners such as Canada, Mexico, China and the European Union have placed retaliatory tariffs on the U.S. and further weakened trade relationships. ARA’s director of public policy, Hunter Carpenter, addresses the outstanding trade issues and their impact on agriculture, agricultural retailers and the country.
Why is trade important to agricultural retailers?
The Agricultural Retailers Association has long supported the United States of America’s free, fair and reciprocal trade agreements with partners across the world. Agricultural retailers around the country depend on their farmer-customers for their own business success; more money made at the farm gate equals more money spent to plant and harvest. It’s no secret that the ag retail industry benefits from general improvements and success in the ag economy. At the crux, market certainty is paramount in this ever-changing global marketplace.
Where does ARA stand on the U.S.-Mexico-Canada Agreement (USMCA)?
The USTR has made recent inroads with some of these countries such as Mexico and Canada, and the USMCA is an example of that. This agreement will replace the North American Free Trade Agreement (NAFTA) if ratified by Congress.
ARA wholly supports the ratification of USMCA, as the agreement will be a great benefit to American agriculture. According to the American Farm Bureau Federation, U.S. agricultural exports to Canada and Mexico quadrupled from $8.9 billion in 1993 to $39 billion in 2017. The two countries are top markets for U.S. grains, dairy products, meats, fresh fruits and vegetables. Nearly one-third of U.S. agricultural exports went to our North American neighbors in 2017. ARA also supports coming to an agreement with trading partners in order to decrease market uncertainty, expand export opportunities and help stabilize our global trade efforts.
ARA has joined the USMCA Coalition to add the retailer voice to a larger effort to support the USMCA. The USMCA Coalition is a group of U.S. companies and associations working to secure congressional approval of the agreement.
What is ARA doing to impact the trade negotiations?
The ARA public policy staff will soon begin meeting with members of Congress to ask for their support of USMCA. NAFTA is in need of an upgrade, and enhancements made in USMCA will only strengthen the U.S. agricultural economy. The full agreement is available at ustr.gov.
To educate our members, we invited the USTR’s chief agricultural negotiator Gregg Doud to address the ARA board of directors at the recent winter board meeting in Washington, D.C. Doud gave a compelling argument for the administration’s actions to date.
ARA policy staff also recently heard from the administrator of the USDA Foreign Agricultural Service (FAS) Ken Isley, who gave updates on the department’s efforts to empower U.S. trade expansion and other global market opportunities. Forging relationships with administrative staff, such as ambassador Doud and administrator Isley, gives ARA a more powerful voice in Washington, D.C., and it allows us to advocate on our membership’s behalf.
What is your impression of the future of trade with China?
Based on the conversation we had with Doud, the tariffs that the Trump administration has placed on China represent the belief that the Chinese government has long violated intellectual property rights and failed to recognize legitimate patents. The administration largely relied on Section 301 of the Trade Act of 1974 to impose these tariffs. China quickly imposed retaliatory tariffs on the U.S., and the country threatened to decrease its imports of U.S. agricultural commodities.
China has already agreed to purchases of ag commodities, and conversations between the two countries are ongoing. Any formal agreement made between the U.S. and China would go a long way in restoring market certainty and accountability.
It should be noted that unlike USMCA, any agreement made with China will not need congressional approval and will be enacted bilaterally.
What can ag retailers do to make their voices heard on trade issues?
We will ask ARA members to weigh in on these important issues. Grassroots advocacy is key to success. Members of Congress are eager to hear from constituents on these important topics, and to that end, we will work to empower our industry’s voice on Capitol Hill. If you would like to know how you can support these advocacy efforts, then contact us directly to join our grassroots network so your voice can be heard.
While many of these agreements are still in negotiation, what is being done to help farmers through the negative economic impacts they’re already facing?
As a result of the retaliatory tariffs placed on the U.S. and the ensuing decline of agricultural exports, U.S. Secretary of Agriculture Sonny Perdue has issued two rounds of mitigation payments to farmers and producers who were eligible to receive Market Facilitation Program (MFP) funds for their 2018 agricultural production.
“The president reaffirmed his support for American farmers and ranchers and made good on his promise, authorizing the second round of payments to be made in short order. This assistance will help with short-term cash flow issues as we move into the new year,” Secretary Perdue said.
Details of the programs currently employed by USDA, according to a December 2018 news release, are as follows:
- USDA’s Farm Service Agency has been administering MFP to provide the first payments to almond, corn, cotton, dairy, hog, sorghum, soybean, fresh sweet cherry and wheat producers since September 2018 for the first 50% of their 2018 production.
- USDA’s Agricultural Marketing Service is administering a food purchase and distribution program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food and Nutrition Service is distributing these commodities through nutrition assistance programs, such as The Emergency Food Assistance Program and child nutrition programs. So far, USDA has procured some portion of 16 of the 29 commodities included in the program.
- Through the USDA FAS Agricultural Trade Promotion program, $200 million is being made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions. The application period closed in November with more than $600 million in requested activities from more than 70 orgs. ARA will continue to be active in Washington on behalf of the agricultural retail industry and its farmer-customers.
For more information, please contact the ARA via aradc.org.