TRADE UPDATE: Food & Agriculture | February 13th, 2024

HIGHLIGHTS

U.S.-Mexico: Mexico’s President Andres Manuel Lopez Obrador presented a broad Constitutional reform package, which included a ban on genetically modified corn.??

WTO: On Feb. 7, the U.S. Senate Ways and Means Subcommittee on Trade convened a hearing on the 13th WTO Ministerial Conference (MC13). Stakeholders expressed concerns regarding the potential lack of significant outcomes.

U.S.-EU: European Commission President Ursula von der Leyen withdrew the Sustainable Use Regulation (SUR) proposal aimed at reducing pesticide use in Europe.

Trade Remedies: On Feb. 6, The U.S. International Trade Commission (ITC) determined that U.S. industry is not materially injured or threatened by tin mill products from Canada, China, and Germany. As such, no anti-dumping or countervailing duties will be applied.

U.S.-Kenya: On Feb. 6, USTR provided a readout of the Jan. 29-31, U.S.-Kenya Strategic Trade and Investment Partnership (STIP) negotiation. According to the report, key officials from the United States and Kenya convened in Nairobi for intensive discussions on the STIP, emphasizing collaboration on agriculture, labor rights, anticorruption, and domestic service regulations.

Miscellaneous Tariff Bill: On Jan. 30, a total of 36 agribusiness groups sent a letter to Congress encouraging passage of the Miscellaneous Tariff Bill (MTB).? The previous MTB expired in December 2020.

Trade Data:

• The FAO reported that the FAO Food Price Index, which tracks the international prices of globally traded food commodities, has decreased 10.4% from a year ago.
• On Feb. 7, the Bureau of Economic Analysis released its annual 2023 data on U.S. International Trade in Goods and Services showing a decrease in trade deficit in 2023 from the previous year, but still an overall deficit of $773.4 billion.

“The Commission proposed the Sustainable Use Regulation, which is the worthy aim to reduce the risks of chemical plant protection products. But the SUR proposal has become a symbol of polarization. It has been rejected by the European Parliament. There is no progress anymore in the Council either. So, we have to do something. That is why I will propose to the College to withdraw this proposal.” -European Commission President Ursula von der Leyen

U.S.-MEXICO

PROPOSED CONSTITUTIONAL GENETICALLY MODIFIED CORN BAN

On Monday, Feb. 5, Mexico’s President Andres Manuel Lopez Obrador presented a broad Constitutional reform package, which included a ban that prohibits genetically modified corn to be planted and sold for human consumption.

Of the twenty reform items, the seventh declares a prohibition on GMO corn in Mexican territory, but does not include additional specification, leaving many details open to interpretation.

Constitutional changes require a two-thirds majority of Congress to pass, which the Monera party does not currently have.

Many analysts speculate that the intent is to attract media attention, ensure the continuation of his priorities, and influence the upcoming Presidential campaign debate. The official campaign season starts in March and runs through the elections in June.

Other reform components related to passenger rail service access, removing several autonomous regulatory bodies, pension reform, mining, workers compensation, reducing the size of the Congress; banning e-cigarettes and fentanyl, banning animal cruelty, among others these reform components also come after the USTR initiated a USMCA dispute panel on Aug. 21, 2023, which challenged certain measures Mexico has taken on imports of agricultural biotechnology.

WORLD TRADE ORGANIZATION

CONGRESSIONAL HEARING ON MC13

On Feb. 7, the House Ways and Means Trade Subcommittee facilitated a hearing on “Advancing America’s Interest at the World Trade Organization’s 13th Ministerial Meeting .”

Witness’s included Dennis Shea, Executive Director of the J. Ronald Terwilliger Center for Housing Policy and former Deputy USTR and U.S. Ambassador to the WTO, and Bobby Hanks, CEO of Supreme Rice, who was representing the USA Rice Federation, among others.

Expectations for MC13 are low.? As expressed by Executive Director Dennis Shea, “Looking ahead to MC13, the outcomes we can expect may be even less ambitious than those achieved at MC12.”

In advocating for continued progress and engagement at the WTO, Mr. Bobby Hanks, states: “This system has flaws, but on behalf of your constituents who depend on trade, I’d ask what better system could replace it? USMCA is a good agreement, but the core agriculture and SPS disciplines in USMCA outside of tariffs already apply to more than 160 other countries through the WTO. When the Office of the U.S. Trade Representative (USTR) brought the biotech case against Mexico, virtually every provision of USMCA cited in that case has equivalent language under the WTO – language that was originally pushed by the United States and now applies to 164 countries, not just three.”

Speaking generally about the WTO, Rep. Greg Steube mentioned that the United States is the largest contributor to the WTO, which brings into question if the United States. is getting enough returns to maintain their interest in the WTO.

In the context of discussions on India’s public stockholding, J. Smith requested the USITC investigation on the global competitiveness of the U.S. rice industry. This study was also conducted in 2015, which provided economic evidence on trade enforcement actions by the USTR.

U.S.-EU

EUROPEAN COMMISSION: PESTICIDE REDUCTION BILL

European Commission President Ursula von der Leyen announced the withdrawal of a legislative proposal—Sustainable Use Regulation (SUR)—focused on the reduction of pesticide use in Europe.

The SUR aimed to achieve certain targets from the Green Deal and the Farm to Fork Strategy. One of those goals is to reduce 50% of pesticide use by 2030.

In a Feb. 1 speech, President Ursula von der Leyen explained, “The Commission proposed SUR, which is the worthy aim to reduce the risks of chemical plant protection products. But the SUR proposal has become a symbol of polarization. It has been rejected by the European Parliament. There is no progress anymore in the Council either. So, we have to do something. That is why I will propose to the College to withdraw this proposal.”

The European People’s Party (EPP) has been positioning itself as a strong advocate for farmers’ interests in hopes of securing their election votes. The EU elections will be held in June.

Negotiations on the pesticide file between national governments have been halted.

Farmers in France, Belgium and the Netherlands have been protesting in recent weeks over many grievances, including this issue.

TRADE REMEDIES

TIN MILL ANTI-DUMPING (AD) COUNTERVAILING DUTY (CVD) INVESTIGATION

On Feb. 6, The U.S. International Trade Commission (ITC) determined that U.S. industry is not materially injured or threatened by tin mill products from Canada, China, and Germany.?

However, the U.S. Department of Commerce found on Jan 5, 2024, that imported tin mill from Canada, China, Germany, and Korea were unfairly priced and found countervailable subsidies on tin mill from China, no AD or CVDs will be applied because ITC found no injury.

In a press release by the Consumer Brands Association, they state, “The Consumer Brands-led effort has resulted in a true victory for U.S. consumers and manufacturers with the International Trade Commission’s unanimous vote to reject new tariffs on tin mill steel.”

The investigation was requested by one U.S. steelmaker—Cleaveland-Cliffs. In a press release by U.S. Senator Sharrod Brown (D-OH), he remarks: “The ITC got this wrong. This ruling makes it impossible for Ohio’s tin mill industry and other domestic manufacturers to compete with unfair, illegally dumped steel from countries like China,”?said Brown.?“I will never stop fighting for these workers. This ruling is just the latest evidence that our trade enforcement tools are not strong enough. Congress must modernize our trade enforcement laws including passing my bipartisan Leveling the Playing Field 2.0 to fight back against the unfair trade practices that are putting these Ohioans out of work.”

U.S.-KENYA

STRATEGIC TRADE AND INVESTMENT PARTNERSHIP (STIP)

On Feb. 6, USTR provided a readout of the U.S and Kenya Strategic Trade and Investment Partnership in Nairobi, Kenya from Jan. 29-31.?

Assistant USTR Constance Hamilton led the U.S delegation where officials from government agencies (USDA, FDA, U.S. Department of State) participated throughout the negotiation.

Previously, a similar in-person meeting was held in Washington, DC from Oct. 4-7, 2023.

Topics that were discussed include concerns on agriculture, labor rights, anticorruption, and regulations on domestic services.

The USTR organized a roundtable discussion with stakeholders to gather different perspectives and insights that may help advise them with their policies.

On Jan. 30, the U.S. Embassy and the American Chamber of Commerce hosted a roundtable with a Congressional Staff delegation, Senate Finance Committee, and AmCham Members.

MISCELLANEOUS TARIFF BILL

U.S. INDUSTRY ADVOCATES FOR RENEWAL OF THE MISCELLANEOUS TARIFF BILL (MTB)

On Jan. 30, a total of 36 agribusiness groups sent a letter to Congress encouraging passage of the Miscellaneous Tariff Bill (MTB).?

The previous MTB expired in December 2020.

According to CropLife America , manufacturers have paid $1.3 million per day in tariffs while the MTB is expired.?

On Jan. 18, CropLife America, The National Association of Manufacturers, and the American Chemistry Council, among others, met with Congressional representatives, urging them to renew the MTB.

As explained in a Congressional Research Service report on the MTB , the purpose is to “temporarily suspend or reduce the import tariffs paid on particular products imported into the United States.? To be considered for inclusion in the MTB, each proposed duty suspension must be noncontroversial (e.g., no domestic producer or Member objects); revenue-neutral (e.g., forgone tariff revenues of no more than $500,000 per product); and administrable by U.S. Customs and Border Protection (CBP).”?

TRADE DATA

FAO FOOD PRICE INDEX ?

The FAO reported that the FAO Food Price Index, which tracks the international prices of globally traded food commodities, has decreased by 1% from December and 10.4% from a year ago.

The FAO Cereal Price Index has also decreased by 2.2% from December 2023. The FAO noted a decline in wheat prices due to “strong competition between exporters and the arrival of recently harvested supplies in the southern hemisphere countries, while those of maize fell sharply, reflecting improved crop conditions and the start of the harvest in Argentina and larger supplies in the United States of America.”

The FAO Vegetable Oil and Sugar Price Index rose, while the FAO Dairy Price Index stayed constant, and the FAO Meat Price Index declined.

A Food Security Portal blog post shares that forecasts on soybean production have remained stable and maize production rose in January. Regarding fertilizer prices, nitrogen prices have increased, while potash prices slightly decreased.

In a separate blog post on the Food Security Portal, IFPRI authors describe the significant impact from India’s export restrictions on rice, particularly in regions that are heavily reliant on Indian rice imports like sub-Saharan Africa.

The article notes the uncertainty surrounding how long India’s export restrictions will last and how long these measures will exacerbate pressure on global rice markets.

U.S TRADE DEFICIT

On Feb. 7, the Bureau of Economic Analysis released its Annual 2023 data on U.S. International Trade in Goods and Services.

The trade deficit in 2023 was $773.4 billion, which is 18.7% lower than $951.2 billion from the prior year.

Notably, U.S. trade goods and services deficit declined from 2022 to 2023 because of decreased total imports.

Consumer spending has contributed to boosting the U.S. economy, but it is expected that high interest rates will incentivize individuals to decrease their spendings and add pressure on imports.

The monthly trade deficit figures grew slightly by $0.3 billion from November to December 2023.

For the first time in 20 years, the United States has imported more goods from Mexico than from China.

According to the report, in 2023, U.S. goods deficit with Mexico rose as imports from Mexico increased $20.8 billion to $475.6 billion.

According to the report, in 2023, the goods deficit with China decreased $102.9 billion to $279.4 billion.