As we head towards the end of the summer season, the world of international trade continues to be a volatile one. Western Growers is actively working on several fronts to ensure our members’ existing or prospective markets remain open to their products.
Here are some updates for your awareness:
What to Know: Progress towards a deal has essentially stopped, if not retreated. The past few weeks have been marked with tit-for-tat retaliatory actions by both the United States and China, with each accusing the other of being unreasonable and unreliable in negotiations. Specifically, President Trump has threatened a new round of tariffs on Chinese imports starting on September 1 – 10% on $300 billion. China then announced it would consider new tariffs of its own, as well as stopping its state-owned firms from buying any and all U.S. ag products; how this could impact privately-owned Chinese firms’ purchasing actions remains to be seen. Additionally, the value of China’s currency (yuan) weakened, with the government attributing it to the trade tensions. The U.S. Treasury disagrees with this assessment and has moved to label China as a ‘currency manipulator’, a designation that can carry significant economic and geopolitical implications.
Despite the recent escalations, Administration officials say that U.S.-China talks scheduled for September remain in place. Unfortunately, there is growing concern across the ag industry, trade experts, Congress and the Administration itself that the current trade impasse with China could last until 2020.
WG Action: WG’s monitoring of this situation has been constant. Since last year, we’ve repeatedly engaged with the U.S. Trade Office (USTR), U.S. Department of Agriculture (USDA), U.S. Department of Commerce and Members of Congress to convey our message that we need a resolution as soon as possible to restore vital markets and trade stability. During its May fly-in to Washington D.C., WG’s Board of Directors spoke directly with the top agricultural trade officials at both USTR and USDA about the pressures our specialized industry faces. WG also works closely with its other specialty crop industry counterparts to share what we’re hearing on the ground and ways to push the Administration with a unified voice for our fresh produce members.
What to Know: With the conclusion of the Japanese elections at the end of July, the USTR and their Japanese counterparts are moving quickly to negotiate a limited, ‘early harvest’ trade deal – one that deals with agricultural tariffs (among a few other issues) and wouldn’t require Congressional approval. The ideal target date is late September, although the prevailing thought is that this is an ambitious timeline. For several commodities in our sector, an agricultural deal with Japan would present significant net new market opportunities.
WG Action: Last fall, WG submitted official comments detailing our two priority asks: 1) tariff parity for specialty crop products, so they can compete with other countries that currently benefit from much lower tariff rates, and 2) reforms to Japan’s rigorous sanitary-phytosanitary (SPS) regime, which has long been misused to essentially block several commodities from fairly competing in their markets. With the recent news of reignited negotiations, WG continues to meet with USTR and impress the importance of addressing both matters for our industry.
TRADE AID PACKAGE
What to Know: To help farmers with continued trade-connected losses, USDA has rolled out its second trade mitigation package, which is authorized at $16 billion and designed essentially the same as the first one from the fall. There is a direct payment option, a food purchasing option, and a market development funding option.
For more information, visit:
- USDA Market Facilitation Program, to apply for direct payments (deadline is December 6, 2019)
- USDA Food Purchase and Distribution Program, to pursue selling your commodity to USDA for federal food programs (begins October 1, 2019)
- USDA Agricultural Trade Promotion Program, to explore commodities that received new funding to pursue new marketing opportunities overseas
WG Action: WG continues to convey to USDA that, while the assistance is appreciated, it doesn’t make our impacted growers whole; only restoring our export markets can fully do that. We have also strongly pushed for a larger share of the aid for specialty crops, which often get overshadowed by row crops and livestock but are being significantly impacted all the same. Specifically, we requested that more specialty crops be given a direct payment option, which is the quickest way for farmers to recover some lost income. In the first mitigation round, only almonds and cherries were eligible; now in this second round, all tree nuts and table grapes are eligible as well.
MEMBER ASSISTANCE WITH THEIR BUSINESS
What to Know: In addition to these industry-wide matters, WG continues to tackle commodity- or market-specific problems on behalf of our members. In the last few months, we’ve proactively addressed issues dealing with vegetable exports to Japan, exporting and labeling into Korea, produce imports from Mexico, and delayed shipments at U.S. sea ports. We conduct ‘fact-finding’ research and work closely with USDA and other key agencies, all with the goal of securing a quick resolution for the member and potentially developing ‘best practice’ recommendations for the sector at large.
If your business has issues or questions related to exporting, importing, market development or any other international trade issues, we encourage you to use WG as a resource.
WG TRADE ALERT SYSTEM
What to Know: International trade issues arise quickly and can potentially have industry-wide impacts. WG is constantly improving ways to alert and communicate with members, so your business can prepare itself as necessary. Our new Trade Alert System will send you emails as priority issues occur, with WG’s analysis of how the event will affect the specialty crop industry.