Date: Jan 14, 2020
Magazine:
January/February 2020

This past year, the industry was once again kept on its toes with trade; some commodities were pushed clear back onto their heels. As we reflect on some of the year’s most notable events, we can expect this new decade to start off with significant trade matters being removed, and added, to the industry’s wish list.

The biggest spotlight continues to fall on China. The Administration has announced a phase one deal with China, the most notable step thus far towards resolving the nearly two-year trade conflict that has significantly harmed the agriculture industry through costly retaliatory tariffs and increased market displacement by foreign competitors. Overall, the deal is expected to include commitments from China to: 1) increase agricultural purchases annually for the next two years, and 2) work on eliminating or easing Sanitary and Phytosanitary (SPS) and non-tariff barriers. As of this writing, the text of the agreement has yet to be published, and it is unlikely that exact details of commodity-specific purchase amounts and timelines will ever be released. WG and its allies will continue to urge the Administration to ensure this phase one deal with China is finalized quickly and includes proportionate relief for our sector.

U.S. agriculture secured some gains in the East Asia region earlier this year through a partial U.S.-Japan Trade Agreement. The deal eliminates or reduces tariffs on a wide swath of specialty crops, improving parity between U.S. growers and foreign competitors. Due to its limited scope, it only required approval from the Japanese legislature, not the U.S. Congress. In 2020, U.S. Trade Representative (USTR) is expected to resume negotiations with Japan on ‘phase two’ to address the more complex remaining ag and non-ag matters. WG’s objective will be to secure reforms to Japan’s onerous SPS regime, which is the overarching export roadblock for several commodities such as leafy greens and stone fruit.

The closing days of 2019 also saw Congress’s lower chamber overwhelmingly approve the U.S.-Mexico-Canada Agreement (USMCA); the Senate is expected to cast its vote sometime early this year. The deal—from our industry’s perspective—provides relatively minor updates, with market access expected to remain roughly the same. There is no change to tariff treatment, nor any inclusion of the controversial seasonality provisions sought by the Southeastern region. However, the deal’s hard-fought labor reform requirements on Mexico could prove to be significant. By compelling Mexico to increase its wages, restructure its labor dispute system, and improve worker conditions, the end result could help shrink the labor cost disparity between Mexican imports and domestic varieties. WG actively participated in a broad, multi-sector effort to pass USMCA, which ultimately provides a much-needed infusion of certainty and a ‘return to normal’ after months of anxiety.

While these issues took up the most oxygen from government and industry, there continues to be lingering market pressures on other fronts. The conflict with the European Union heated up, with the United States winning World Trade Organization (WTO) approval to impose aircraft-related tariffs on the bloc, which in turn has threatened unspecified retaliation. The years-long fight with the EU over its unrealistic SPS restrictions and Maximum Residue Level (MRL) roadblocks also shows no sign of slowing down. Trade relations with India remain strained, with the United States revoking certain trade privileges and India increasing tariffs on tree nuts and apples in response. There was more than one threat of tariffs hikes and cross-border commerce shutdowns against Mexico due to the Administration’s dissatisfaction with its handling of Central American refugees. The President has also fired recent trade-related warning shots at Argentina, Brazil, France, and Germany.

The majority of the aforementioned issues remain incomplete or unresolved. Looking at what’s ahead for the industry’s overseas prospects, no one can say with certainty what will happen this week, let alone this year. If nothing else, what can be said with certainty is that trade will remain a top news topic in 2020.

Western Growers will stay active in its work to advocate for the specialty crop industry in the international trade arena and help bring relief and opportunities for its members. It is important to note that the most frequent request our team gets from Congress and the Administration is for direct stories of trade impact on the ground. We encourage you all to reach out in the new year with past or ongoing trade issues your operations have experienced.

WG Staff Contact

Tracey Chow
Government Affairs Specialist
202-296-0191 x7301

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