The G20 summit last week ushered in a flood of trade-related announcements, meetings, and reports. Among these were the meeting between President Donald Trump and China’s President Xi Jinping, the clearing of Argentina to export raw beef to the U.S., and the scheduled signing of the U.S.-Mexico-Canada Agreement.
The G20 summit, also known as the Group of 20 talks, began last week on Nov. 28 in Argentina. The summit brings together world economic leaders to discuss global trade and economic issues. Member countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.
The meeting between Trump and Xi—scheduled for Saturday, Dec. 1, after print—drew the most attention and pre-emptive discussion. The meeting dominated headlines and opinion sections of both U.S. and international mainstream news outlets all week. One commentator from as far off as Australia characterized the importance of the Trump-Xi trade talks by saying, “nothing less than a reasonably healthy global trading system and continued economic growth will be on the table.”
Domestically and more immediately ag-relevant, Lindsay Greiner, president of the Iowa Soybean Association, urged Trump to “make the most of the opportunity” with trade talks with Xi.
“Trade wars involving food are a lose-lose proposition,” Greiner said in a statement on Nov. 27.
“Here at home, net farm income was down nearly 50 percent from 2013, even before China imposed tariffs on U.S. soybeans. Now, large global supplies combined with a sharp reduction in U.S. exports to the world’s leading soybean buyer are adding downward pressure on prices. This negatively impacts farmers and businesses and their employees who depend on ag production and commerce.”
The “sharp reduction” in U.S. soybean exports to China has been estimated as down 97 percent compared to the same time last year.
Imports from Argentina
Just a day before the beginning of the G20 summit, the USDA’s Food Safety Inspection Service issued a notice indicating Argentina is now eligible to export raw beef to the U.S. Beef from cattle slaughtered in Argentina on or after Nov. 27 is eligible for raw exports.
Previously, Argentina could send cooked and ready-to-eat processed beef. Despite this ability, Argentina has not sent much beef to the U.S. in the recent past.
According to USDA records, June 2018 saw 102,000 lbs. of Argentinian beef imported into the U.S. That was the only beef trade that occurred this year (through the end of September, most recent data). The next most recent beef imports from Argentina was almost three years prior in September of 2015. The total U.S. imports of beef from Argentina for 2015 stood at 1.3 million pounds, roughly .04 percent of the total U.S. beef imports for the year.
Though Argentina has only previously been able to send cooked or processed beef to the U.S., it has a 20,000-metric tons (44.1 million lbs.) tariff-rate quota with the U.S. for fresh or frozen beef.
The World Organization for Animal Health (OIE) has given Argentina a mixed status regarding foot-and-mouth disease. The northern half of the country is listed as “FMD free with vaccination,” the mid-level safety rating, while the southern half is listed as “FMD free without vaccination,” the highest safety rating.
USMCA issues
The new U.S.-Mexico-Canada Agreement (USMCA)—replacing the North American Free Trade Agreement (NAFTA)—was expected to be signed by the leaders of the three member countries on Nov. 30 during the G20 summit, after press time. There were several domestic concerns over this potential signing in the days and weeks leading up to it, however.
On the purely agricultural side, there are still questions from U.S. dairy and grain industry groups about the enforceability of Canadian concessions in those areas.
According to DTN’s Washington Insider, International Dairy Foods Association President and CEO Michael Dykes said that the U.S. will have to pay close attention to the implementation of USMCA to make sure those concessions are fully realized for U.S. dairy producers.
Labor provisions in USMCA have also raised eyebrows on both sides of the congressional aisle, which could pose a threat to the deal being passed following signing by the U.S., Mexico, and Canada.
On one side, 40 House Republicans sent a letter to Trump urging him to remove language from the USMCA’s Chapter 23 that would extend protections against workplace discrimination based on sexual orientation and gender identity before the expected Nov. 30 signing. As of Nov. 29, the language still existed in the text of the agreement available on the U.S. Trade Representative’s site.
“A trade agreement is no place for the adoption of social policy,” the 40 signers of the Nov. 16 letter argued. They described themselves as “deeply concerned” that the language was included and called it “insulting to our sovereignty.” Extending workplace protections for gay, lesbian, bisexual, and transgender workers was a Canadian priority.
Despite the decidedly critical tone of the letter, it did not include any direct threat that the signers would refuse to vote for USMCA when it comes before the House. DTN’s Washington Insider however interpreted the letter as the signers “threatening to defect” from the USMCA vote.
On the other hand, House Democrats have threatened to withhold votes on the USMCA if, among other issues, sections dealing with Mexican labor standards are not strengthened and better assurances are made that the U.S. will regain jobs lost to Mexico. Other concerns of House Democrats revolve around environmental policy and climate change addressed in the USMCA.
“I don’t think there will be Democratic votes if those steps aren’t taken,” Rep. Sandy Levin (D-MI-09) told Politico.
WTO concerns
Just ahead of the G20 summit, the World Trade Organization (WTO) released a number of global trade-related reports.
One report, issued a week before the G20 summit, showed “new import-restrictive measures” issued by G20 countries between May to October of this year impacted an estimated $481 billion (in U.S. dollars) worth of global trade. This is reportedly “more than six times larger than that recorded in the previous reporting period and the largest since this measure was first calculated in 2012.”
“The report’s findings should be of serious concern for G20 governments and the whole international community,” said WTO Director-General Roberto Azevкdo.
“Further escalation remains a real threat. If we continue along the current course, the economic risks will increase, with potential effects for growth, jobs, and consumer prices around the world. The WTO is doing all it can to support efforts to de-escalate the situation but finding solutions will require political will and it will require leadership from the G20.”
Another report, released Monday Nov. 26, was one of the WTO’s cyclical updates, specifically the “World Trade Outlook Indicator” (WTOI) that aims to quantify the state of global trade confidence and growth/declines. In this current edition, the indicator showed further slowing of trade growth in the fourth quarter of 2018.
[inline_image file=”c8cfe89eb89cf8976b400982fceccff0.jpg” caption=”Global trade on the table at G20 – WTOI”]
“The most recent WTOI reading of 98.6 is the lowest since October 2016 and reflects declines in all component indices. It is below the previous value of 100.3 and falls under the baseline value of 100 for the index, signaling that trade growth in the coming months is expected to be below-trend,” the report read.
“Agricultural raw materials” trade is one of the mentioned component indices. That index stood at 97.2, lower than the overall average and the maintenance level of 100. Other indices that were lower were “automotive production and sales” at 96.9, “export orders” at 96.6, and “electronic components” at 93.9. — WLJ
