Cutting barriers to trade: Chief ag negotiator details challenges, opportunities

WASHINGTON — The money farmers make in the United States hinges on the sales made elsewhere around the world.

“What we do on exports and trade, at the end of the day, is the difference in terms of the bottom line for American farmers, for the prices you get, for the volume that you are able to ship,” said Doug McKalip, the chief agricultural negotiator in the Office of the U.S. Trade Representative.

McKalip spoke at the Corn Congress in Washington as farmers from across the country gathered to make decisions for the National Corn Growers Association.

“Our job at USTR is to get you all the best deal possible in terms of market access, to get favorable trade conditions and compatible trading systems, where appropriate, to get trade agreement language in place,” he said. “And to get favorable tariff conditions, as well, that will set up a situation that benefits your production.”

It is a team effort, McKalip said.

“We at USTR work really hard and we cooperate with the USDA and others to break down barriers to market access around the globe and various marketplaces,” he said, citing additional partnerships with the NCGA and the U.S. Grains Council.

“That work has added up to $21 billion over the last three years of market preserved because of that effort to remove market barriers in those places. So, this continues to be a major priority for us.”

McKalip provided an update on several important agricultural export markets:

On Mexico

With respect to the USMCA case that we have brought against Mexico regarding its approach to biotechnology and, quite frankly, a policy put in place by their outgoing president that would disrupt trade and to stop trade without appropriate scientific rationale or justification, just about two weeks ago we argued our case in front of the USMCA panel and that session went quite well.

There were questions that the panel provided in writing, for the record, and we have responded to all the questions the panel provided. Mexico has done the same.

The panel is on schedule to bring this thing to a close this fall and get a judgment rendered for us. So, we are very confident about our case.

We spent a lot of time and effort with lawyers at USTR. A lot of smart folks’ time and effort went into making sure we had a very solid and airtight case against Mexico’s policies.

This is something that we will not rest until we get done. And I know this is super important not just for corn growers around America, but quite frankly, farmers come up to me with all kinds and all types of commodities around the U.S. and they say we cannot allow our country’s trading partners to play loose with the science, and if they do that on biotech grain, they can do it with anything — so, this is a super important case for the U.S., and we will prevail.

On Central Asia

Over the course of just the last year, we were able to get tariff reduction on over a dozen commodities, mostly in Central Asia. A big effort went into getting a tariff reduction on industrial ethanol, for example. There’s certainly a lot more work to do in terms of on-road ethanol in that region, and we’re going to continue to press for that.

We’ve worked hard on tariff reduction on a lot of animal protein products, such as turkey, duck meat, for example.

Everything we can do, to see tariff reduction on meats and cheeses, dairy, etcetera, at the end of the day that only provides a stronger market for what you all do in the supply chain that you furnish. So, that’ll continue to be a big priority for us for the rest of this year and for the future, as well.

On Southeast Asia

I was in Singapore about four weeks ago. I signed the two pillars in the Indo-Pacific Economic Framework, including the fair economy pillar and the overall life of agreement.

There are over a dozen trading partners in Southeast Asia that are part of that compact. And this effort really goes a long way toward making sure that our trading relationships are better lined up so that we don’t have a ship full of grain and get turned away at a port.

Over a dozen partners — countries like Vietnam, Thailand, Indonesia, Malaysia — are all part of this effort. And they represent an extremely large future marketplace.

We’ve got to diversify our buyers in that region and there are certainly a lot of Asian marketplaces that are very eager to do business with us.

We’re working on a specific trade agreement with Taiwan. They are currently a $3.7 billion market for U.S. agriculture commodities, but we’re really just scratching the surface of what is possible there.

On Africa

We’re deep into the negotiations on what’s called the Kenya STIP, the Strategic Trade and Investment Partnership. Very similar to the IPEF, it’s a way to better get us in alignment on a number of regulatory issues, including sanitary and phytosanitary issues, and it can really go a long way toward establishing a deeper trade relationship on the continent of Africa.

There’s a heck of a lot of enthusiasm among those countries. I was down in Johannesburg, South Africa, in November.

There is a tremendous interest in U.S. farm products and how we can deepen our trade relationship on the continent of Africa. There’s a lot of growing numbers of consumers there.

They have a high interest in the quality of product that U.S. farmers provide, consistency and the price point that they provide, as well.

On Japan

We were able to make changes with the Japanese government that will allow us to capture up to 100% of their on-road ethanol market. This is an over 80-million-gallon prospect for U.S. farmers.

Japan also changed its beef tariff rate quota to increase the volume of products that we can send there on beef — not directly corn, but that feed is going to certainly go a long way to helping the furnish that Japanese beef market that is very enthusiastic for U.S.-grown beef products.

On Brazil

We have continued to be very frustrated by the 18% duty that Brazil has on U.S. ethanol. We are also frustrated by the fact that they still have not fixed their version of the renewable fuels program. It’s called the RenovaBio program.

Today, we still do not have one single U.S. biofuel company that has registered for and qualified for Brazil’s RFS program. That needs to change.

Brazil has signaled changes and improvements to their policy, but until we actually see a company get across the finish line and see a pipeline of U.S. companies registered for Brazil’s RFS program, that is not success and, quite frankly, that is the trade irritant that is distracting us from a relationship that should be much different, much stronger.

On Chile

The country of Chile signed an agreement with us that will be an assurance that geographical indicators can’t be used to stop trade between our countries. And the reason this is a big deal is the European Union has been trying to corner the market on meats and cheeses by protecting certain names and saying you can only buy feta, parmesan or Gruyere cheese, whatever it is, from the European Union.

It’s a big deal for folks who grow feed and feedstock because we can’t allow countries to simply start to say it’s us or nobody else and you can’t buy from anybody else but us.

This Chile agreement hopefully will be a harbinger for things to come and we can expand upon that throughout the globe, as well.

On The EU

The European Union has come forward in the past year with deforestation policy, with policy on minimum residues on pesticides and quite frankly has put a policy forward to say that we’re going to cut off trade first and then trade partners have got to prove to us that they meet our standards, even though those standards are not clear and they’re not transparent about how they tend to regulate. So, this is a big deal for us.

Certainly, we put U.S. farmers up against anybody in the world in terms of sustainability. You all have had to for decades do soil erosion prevention work, wetland protection work, water quality and, quite frankly, American farmers have invested more on their lands in terms of stewardship and will continue to do so, I would say, than any farmers around the globe.

So, we are very much in the fight to make sure that countries do not put unjustifiable barriers to trade in place in the name of sustainability, but instead that we really cooperate and that we measure the things that actually make a difference for the planet.