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Home Farming

Where are the trade agreements, Mr. President, AFBF economists ask

January 11, 2022
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Everyone seems to be focused on higher input costs for crop production, but the largest group of U.S. agriculturalists wants to know when the Biden administration plans to work on trade negotiations.

A Tennessee farmer attending today’s session of the American Farm Bureau Federation (AFBF)’s annual meeting in Atlanta, Georgia, expressed concerns that the U.S. administration doesn’t have an undersecretary of trade and has yet to confirm an ag negotiator. 

“What happens if China stops buying as much as they have been? What happens if Mexico bans genetically-modified corn (GMOs)? What are the projections on prices if these (trade) things happen?” the Tennessee farmer asked a panel of AFBF economists.

Because more than 60% of the U.S. ag exports are concentrated in five countries, the U.S. export portfolio is susceptible to disruptions like China’s drop in purchases in 2016, the AFBF economists explained.

“Man alive, you lose China and Mexico in the course of over two years, considering over 40% of all U.S. corn production is exported, the price picture turns south pretty quick,” Veronica Nigh, AFBF senior economist says.

Nigh added, “This is why we have to push on the (Biden) administration to say, ‘Thank you for your hardy review (of trade). We appreciate the study but we will need to take some action. The rest of the world is currently negotiating trade agreements. The Trans Pacific Partnership was able to continue without us. The rest of the world is signing agreements. We can’t sit on the sidelines.’”

Nigh informed the crowd that the AFBF Team has been sending letters to President Biden highlighting the need for a Phase Two Agreement with China.

Nigh fears that U.S. farmers will be subjected to enormous market whims if there are no trade agreements. 

The AFBF economists sounded alarm about the urgent need for the U.S. in many countries to reach the trade table.

“Regarding trade agreements, are we in or are we out? What are we doing?” Nigh asks. “The rest of the world is negotiating trade agreements. Since a while, the U.S. is not involved in any real negotiations. This (Biden) administration hasn’t made any moves to suggest that it has any deals ready to enter into anytime soon.”


President Biden Speaks

During today’s session of the AFBF’s annual meeting, President Biden delivered a video message to the attendees.

Biden reminded people how important farmers are for the U.S. economy. Biden emphasized his support for building better roads, bridges rails, waterways, and more resilient supply chain to make it faster, cheaper, and easier to get U.S. products to market.

“Every day you feed and fuel Americans, and I want you to know that every day you have a partner in the White House,” Biden stated via video.

Biden did not mention trade talks in any direct way.

Vilsack on Trade

However, USDA Secretary Tom Vilsack was present at the AFBF convention.

Monday’s presentation by Secretary Vilsack featured the topic of trade and exports at the top.

“I know that 30% of what we (U.S.) grow and raise is ultimately exported around the world. It sends a strong message of the incredible productivity of American agriculture that we can continue to export,” Secretary Vilsack stated. 

The leader of USDA stressed the importance to rebuild trust in the U.S. through enforcement of existing trade agreements.

“It starts with China. We all know that the Phase One trade agreement was a breakthrough in China’s trade relations. This led to sales growth, which was not possible with the trade war. Our Chinese friends are about $16 billion light in what they committed to purchase,” Secretary Vilsack says.

According to Vilsack, the U.S. Trade Representative Katherine Tie is continuing to push China to live up to its trade agreement.

“We’re going to continue to press China on complete enforcement and implementation of the Phase One agreement before discussing any trade extensions,” Secretary Vilsack says.

Meanwhile, the USDA leader reminded the AFBF’s convention attendees that the U.S. recently opened up pork sales to India; reduced tariffs on corn, wheat, and pork in Vietnam; and is near agreement with Mexico to buy U.S. potatoes.

Secretary Vilsack didn’t miss his opportunity to applaud the recent panel decision by the USMCA acknowledging that Canada is not complying with dairy tariff rate quotas intended by the multilateral trade agreement between the U.S., Canada, and Mexico. 


China’s Purchases

China’s purchases of U.S. agricultural products jumped from $22 billion in 2016 down to $9 billion in 2018. The U.S.-China Phase One trade agreement in 2020 called for China’s purchase of $80 billion worth U.S. agricultural products through 2021. 

The Phase One trade agreement was allowed to expire with China in 2021. China missed its target to buy billions of dollars worth of U.S. ag products by a wide margin, but President Biden’s attempt to extend tariffs could threaten the fate of U.S. businesses operating in China, experts say.

China bought US agricultural products worth $57.4B from 2020 to November 2021. However it did not reach the $73.9 billion required to achieve the Phase One target.

China has purchased $30 BILLION worth of U.S. ag product in the past 11 months, compared to its $130 Billion total purchases.

“China has a lot of purchasing power. The Phase One agreement has shown that China can choose from which supplier they buy their products. While some believed, before the trade agreement, that they (the Chinese) had to buy from us, they have proven that they don’t have to buy from us,” Nigh says.

Source: Successful Farming

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