Milling & Baking News - November 5, 2019 - 26

Washington

Understanding the gain ... and
the pain ... from trade disputes
BY ROBBIN JOHNSON

I have resisted writing about impeachment, but that is becoming increasingly difficult to do. The impeachment
"inquiry" process has gathered steam
over President Donald Trump's dealings with Ukraine, and the likelihood
of a House impeachment vote and a
Senate trial has increased. Needless to
say, that would consume the time and
attention of Congress.
Still, there is much non-impeachment
news for agriculturalists to watch. Trade
developments remain at the core of agriculture's concerns. Among the most
important are: the U.S.-China trade
"truce"; other trade agreements; and
potential new sources of retaliation.

heightened optimistic rhetoric, much
remains to be done to lock in a real
trade truce between the two countries.
Other trade agreements
When President Trump withdrew
the United States from the TransPacific Partnership (T.P.P.), the other
11 member countries in 2018 entered
into a Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (C.P.T.P.P.). Among other things,
this deal gave Canadian, Australian
and New Zealand farmers preferential access to Japanese and other Asian

©LMN - STOCK.ADOBE.COM

Inside the U.S.-China trade talks
In mid-October, President Trump
suspended a pending hike in tariffs
on $250 billion of Chinese exports
and hailed a "breakthrough" in the

Sources of potential retaliation
Already mentioned here were the
mid-October U.S. suspension of duties
on $250 billion in Chinese exports and
the pending Dec. 15 new duties on another $156 billion in Chinese sales to
the United States. If those duties are
imposed, U.S. agricultural shipments
to China likely would take another
retaliatory hit. The meeting between
President Trump and Xi Jinping at the
November Asia-Pacific Economic Cooperation (APEC) forum is likely to be
an important signal on this front.
On an entirely different track is a
U.S.-E.U. trade dispute before the
World Trade Organization (W.T.O.).
The W.T.O. in mid-October authorized U.S. retaliation worth $7.5 billion in its complaint over E.U. Airbus
subsidies, and the Trump administration quickly imposed duties on wine,
whiskey and large aircraft. The W.T.O.
is scheduled to rule early next year on
a parallel European Union suit over
U.S. aid to Boeing. If it authorizes retaliation - as seems likely - U.S. agricultural exports to the E.U. would be

U.S.-China trade talks. Of particular
interest to agriculture is a supposed
Chinese commitment to purchase $40
billion to $50 billion of U.S. farm products "in less than two years." Though
Chinese spokespeople confirmed that
characterization in general terms,
nothing has been committed to paper
as this article goes to press.
Further talks are scheduled, even
while skepticism persists over China's
willingness to compromise on subsidy and intellectual property issues
that have been at the heart of the two
countries' disagreements. Moreover,
both the suspended duties and a plan
to impose new 15% tariffs Dec. 15 on
$156 billion of consumer goods remain
overhanging this whole process.
China has been increasing soybean
and other farm-product purchases
from the United States in recent weeks.
It is unclear, however, whether this is
simply a normal swing in origins from
the southern to the northern hemisphere's harvest, amplified by China's
need to offset an estimated 40% reduction in its hog population because of
African swine fever. So, in spite of
26 / November 5, 2019

Milling & Baking News

animal-product and grain markets.
On Oct. 7, the United States and Japan signed a bilateral trade agreement
that, over time, will reduce those preferences and put U.S. farmers on an
equal footing for beef, pork and wheat
trade worth more than $2 billion while
immediately eliminating Japanese
tariffs on other agricultural products
worth $1.3 billion.
The U.S.-Mexico-Canada Agreement (U.S.M.C.A.) to replace the
North American Free Trade Agreement (NAFTA) remains sidelined in
Congress. Other countries, however,
have been moving ahead in trade
negotiations. Since 2016, the European Union has struck trade deals
with Japan, Canada and the Mercosur countries of Latin America. While
the United Kingdom-E.U. battle over
"Brexit" has dominated trade coverage on the European front, these
other trade deals have resulted in
agreements covering issues like "geographical indicators," intellectual
property protections and dispute settlement that vary from positions the
United States has preferred.

a likely target of E.U. retaliation.
This U.S.-E.U. dispute over aircraft
subsidies reflects many of the problems
the W.T.O. poses for trade governance.
The dispute process is long and arduous, 15 years in this case. It is incomplete
in that it does not reach effectively to
other aerospace issues, such as Russian
and Chinese support for their aviation
industries. And, if the dispute cannot be
resolved within the aerospace activities
of the disputants, the remedy is retaliation - legitimate but still troublesome
for global trade more generally.
All of this means that uncertainties
will continue to hang over U.S. agriculture and its trade interests. Even
if trade wars prove "winnable," it is
painful to be at the sharp end of the
spear in such disputes. MBN

Robbin S. Johnson, a fellow
with the Hubert H. Humphrey
Institute of Public Affairs,
is a contributing editor at
Sosland Publishing Company.
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

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