Even though the year is winding down and people are settling in for time with their families, trade contentions are not taking a holiday.
This is particularly the case with the ongoing trade issues with China.
China celebrated the 40th anniversary of its current economic stance of “reform and opening up” on Tuesday, Dec. 18. During his speech at the celebration in Beijing, Chinese President Xi Jinping told audiences that the economic success of China means “No one is in a position to dictate to the Chinese people what should or should not be done,” according to an official translation broadcast through Chinese state media.
At a meeting of the World Trade Organization (WTO) the next day, Chinese and U.S. representatives traded accusations of reckless trade behavior and hypocrisy, according to DTN’s Washington Insider.
“U.S. Ambassador Dennis Shea accused China of seeking to ‘outright steal’ technology in strategic industries and dump its products on U.S. markets, saying, ‘This is not acceptable,’” reported the Washington Insider.
“China’s ambassador said that ‘reckless actions’ by the Trump administration were the root of the crisis but that Beijing hoped that the two countries could ‘move in the same direction with mutual respect to contribute to the stability of world economic and trade environment.’”
The Dec. 19 WTO meeting was in part the presentation of the “Trade Policy Review” for the U.S. Trade Policy Reviews are mandated in the WTO agreements. Member countries have their trade policies reviewed at regular intervals. This was the 14th review for the U.S.
In the review’s concluding remarks by Trade Policy Review Body Chairman Eloi Laourou, ambassador from Benin, the group acknowledged the continued growth of the U.S. economy and historically low unemployment. The group held the perspective “that the trade and investment regime of the United States remained overall open and liberal.”
There were many areas of concern, however. One of those was agriculture.
“While noting the United States’ efforts to reform global agricultural trade, some members reiterated their longstanding concerns regarding aspects of U.S. agricultural policy, particularly the limited market access for sugar, dairy and cotton, high tariffs, and the continued use of trade distorting support,” wrote Laourou. He added that “The launch of a U.S. $12 billion aid package for agricultural producers hurt by market disruption and retaliatory tariffs was a subject of wide interest.”
Retaliation and trade aid
On Monday, Dec. 17, the second—and theoretically final—round of that ag aid package was announced.
“While there have been positive movements on the trade front, American farmers are continuing to experience losses due to unjustified trade retaliation by foreign nations,” said Secretary for Agriculture Sonny Perdue in the announcement of the aid. “This assistance will help with short-term cash flow issues as we move into the new year.”
The bulk of that aid package comes in the form of Market Facilitation Program direct payments to almond, corn, cotton, dairy, hog, sorghum, soybean, fresh sweet cherry, and wheat producers. The first round of aid payments announced back in September did not include cherries.
Direct payments are available to producers at commodity-specific rates. These rates include $0.01/bushel for corn, $8/head for owned hogs, $1.65/bushel on soybeans, $0.86/bushel on sorghum, and $0.14/bushel for wheat.
Producers who apply will be paid the commodity rate for 100 percent of their certified 2018 production. Producers have until Jan. 15, 2019 to apply, but until May 1, 2019 to get their 2018 production certified.
Despite this effort to mitigate the effects of retaliatory tariffs, some U.S. producers are warning that the trade situation needs to be addressed quickly. For instance, the North American Meat Institute and the National Pork Producers Council recently sent a letter to U.S. Trade Representative Robert Lighthizer.
“We are encouraged by the signing of the United States-Mexico-Canada Trade Agreement (USMCA), which when finalized will bring certainty back to the U.S. pork market. However, while the USMCA preserves zero-tariff access for pork shipped to Mexico, we still face 20 percent tariffs on our products going to Mexico in retaliation for U.S. duties on Mexican aluminum and steel. This is costing our industry profits and market share,” the letter read.
“We understand that the administration views the USMCA and steel and aluminum as distinct issues, requiring separate negotiations. However, our members—pork producers, packers, and processors—who have been hit hard by retaliation, cannot help but think that their interests are being sacrificed for the benefit of those in other sectors. We are very concerned that if the retaliation is not removed soon, pork industry support for the USMCA will be undermined.”
The letter closed with an unambiguous ultimatum: “…as long as the financial impact of the current trade disputes weigh on our industry, we will be reluctant to provide the critical, private-sector support the USMCA will need to achieve congressional approval.” — WLJ
