With the United States bringing in a new administration, one of a different political party, some changes in trade policy and strategy could be expected. As the Biden administration takes shape, the National Association of Wheat Growers (NAWG) encourages it to build upon the trade successes of the Trump administration.
Additionally, NAWG stresses the importance of coalition-building in pursuing solutions to trade disputes and to work towards restoring a functional appeals system at the World Trade Organization (WTO).
Further, NAWG urges the Biden administration to advocate for wheat on the world stage by continuing to support export market development programs through the annual budget process and to work collaboratively to reduce trade barriers. The U.S. exports 50% of its wheat crop, making it a priority for America’s farmers, which should also mean a priority for the new administration.
The Trump administration’s efforts to renegotiate the North American Free Trade Agreement (NAFTA), now known as the U.S.-Mexico-Canada Agreement (USMCA), proved to be beneficial for wheat growers. Mexico has also consistently been a top market for U.S. wheat exports. Through NAFTA, the U.S. had tariff-free access, which was maintained in USMCA.
Additionally, USMCA made important improvements to Canada’s grain grading system, which provides better treatment of U.S. wheat being sold to Canadian elevators, and it updated the sanitary and phytosanitary (SPS) standards that were modeled from the SPS requirements in the Trans-Pacific Partnership (TPP). Maintaining tariff-free access and strengthening science-based disciplines for SPS measures with Mexico is essential to the U.S. wheat industry. NAWG is counting on the Biden administration to fully honor the intent of the USMCA.
Another notable success garnered by the Trump administration is the Phase 1 trade deal with China. In exchange for the U.S. cutting some of its tariffs on Chinese goods, China pledged to purchase more American farm, energy and manufactured goods. Retaliatory tariffs from China had a significantly negative impact on farmers.
However, since the signing of the Phase 1 agreement with China, combined with the market development efforts undertaken by U.S. Wheat Associates (USW), U.S. wheat sales to China have totaled more than 2.8 million tons, representing a near doubling of our long-term average annual sales to China.
Separately, trade and investment discussions with Vietnam, a growing wheat import market, resulted in securing a reduced tariff rate for imported U.S. wheat.
Additionally, the bilateral agreement with Japan negotiated by the Trump administration put the U.S. back onto a level playing field with our competitors. The next administration should continue to build upon these market development actions.
Unfortunately, China continues to be a bad actor in the trade arena and some countries are following suit. In 2019, the United States won two WTO cases against China’s tariff rate quota (TRQ) scheme and domestic support policies. However, China has yet to fully comply in either case.
Additionally, India and other developing countries have been on the same trend of providing trade distorting subsidies that far exceed WTO commitments. The Biden administration should build on the China domestic support case’s success to bring other countries into compliance through litigation.
American wheat farmers need a strong voice on the world stage. There are many opportunities for the Biden administration to be an international advocate for wheat and capitalize on new trade deals. For instance, Brexit provides an opportunity for change to wheat exports to the United Kingdom, and hopefully wheat tariffs will be fully eliminated in a final U.S.-U.K. agreement.
Additionally, the U.S.-Kenya negotiations could serve as a model for future Free Trade Agreements (FTA) across Africa, and a priority in these and future negotiations should be to provide more favorable tariffs and SPS provisions for U.S. sourced wheat.
International trade is critical to U.S. wheat growers, and our overseas customers demand high quality wheat, which American farmers are proud to supply. NAWG urges the Biden administration to continue to work from the Trump administration’s trade successes. Additionally, the new administration must hold bad actors, like China, to their commitments and make them accountable for violating any WTO rulings.
Further, NAWG asks the Biden administration to be a strong advocate for wheat on the international stage and to help find new market opportunities for wheat.