WASHINGTON — While debate continues on the 2018 farm bill in Washington, a majority of farm groups say trade is a bigger issue for them than passage of the new farm legislation.
Trade was front and center last week as a team of top U.S. officials, including Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, traveled to China to negotiate a deal to delay tariffs between the two countries and avert a trade war. However, negotiators left with very little to show in the way of progress.
Gregg Doud, chief ag negotiator with the U.S. Trade Representative’s Office, says President Trump’s tariff schedule is warranted, especially with China, due to their unfair trading practices and trade imbalance with the U.S.
“We import $500 billion worth of stuff from China. We export $150 billion worth of stuff into China,” Doud says.
He says U.S. agriculture is at the tip of the spear regarding the $53 billion of initial and retaliatory tariffs between the two countries.
“When you add the $3 billion in that involves fruits and nuts and pork, on the top of the $50 billion on their list … now 82 percent of U.S. agricultural exports to China are involved in this trade situation,” he says. Yet, Doud says the administration believes they will achieve a favorable trade outcome for agriculture.
The comment period ended April 23 on the trade dispute and tariff schedule the U.S. has imposed on China. As part of those comments, many farm groups asked the president to drop the tariffs to prevent an all-out trade war.
“What we want to see is incentive to get partners across the table from each other,” says Tom Sleight, U.S. Grains Council CEO. “Let’s negotiate this out; let’s not get into a full-blown war.”
Jon Doggett, executive vice president of the National Corn Growers Association, says they’re concerned about the long-term loss of market share with the trade uncertainty.
“The unsettledness is creating problems with our customers,” Doggett says. “Our customers are starting to ask the question — Is the U.S. a reliable supplier?”
U.S. Secretary of Agriculture Sonny Perdue has been assuring farmers that the president has their back.
“Any farmer knows there’s market risk,” he says. “There’s enough market risk out there with weather and just general trade markets and different things like that. We don’t want them to be the victims of trade dispute market disruptions in that way.”
At the same time, Perdue is preparing a trade compensation program, the full details of which are not being disclosed.
However, farmers say they want trade, not aid.
“It’s really anybody’s guess what trade compensation might look like,” says Zach Clark, director of government relations for the National Farmers Union. “It certainly will not replace getting a good price from the marketplace, which is ultimately what we want to see.”
Lawmakers are also asking the president to move swiftly to avoid additional tariffs like those imposed on ethanol, pork and sorghum.
“There are things people are having to cope with right now because of the uncertainty and the turmoil while this negotiation is going on,” says House Ag Committee Chair Michael Conaway. He says his message to the president has been to move as quickly as possible on his trade scheme.
At the same time, farmers and farm groups have been watching the ongoing North American Free Trade Agreement renegotiation and hoping negotiators would do no harm to agriculture. However, the unknowns regarding NAFTA have led to the U.S. losing business with Canada and Mexico.
“I hope we get it done in May. We need to get it done in May. The Mexican customers are getting real nervous,” Doggett says.
The caveat is the toughest issues have not been dealt with, including Canada’s Class 7 milk pricing. Michael Hawkins, ag counselor at the Embassy of Canada, says the issue is a non-starter for them.
“We don’t think we’re making any significant impact there, and again, it’s a policy of supply management that we’re going to be continuing to defend,” Hawkins says.
“It’s not likely that Canada’s going to make any concessions on its pricing until we get into the ninth inning and the last-minute deals need to be cut,” says Chris Galen, senior vice president for the National Milk Producers Federation. So, they are cautiously optimistic about getting resolution on the issue and getting an overall NAFTA deal done.