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Lauritsen Hopeful on Long-Term Ag Trade Solutions

“I know how important trade is to all of you. To all of us in agriculture, whether it’s grains and oilseeds, dairy, meat, fruit, vegetable, sugar, wine, whiskey, everything,” Sharon Bomer Lauritsen, assistant U.S. trade representative (USTR) for agricultural affairs and commodity policy assured a roomful of farmers and ranchers gathered in Washington, D.C., on Monday.

She continued, “We have over 1,800 different tariff lines and products that we keep track of in the U.S. government as far as agricultural exports and imports. American farmers export more than 20% of all farm and livestock product. Our exports account for over 30% of gross farm income.”

Lauritsen returned to Washington, D.C., from China earlier this week. Although many details of her most recent trip cannot be publicly discussed, she shared her perspective at the 25th Annual American-AgriWomen Symposium held at the USDA Jamie Whitten Building in Washington, D.C., on Monday.

The audience was eager to hear her updates regarding ongoing China and NAFTA negotiations. Lauritsen also explained new markets for agricultural products, enforcement efforts, and U.S. agricultural leadership in the World Trade Organization (WTO).

When pressed for her overall outlook on trade Lauritsen said, “As a trade negotiator, you have to be optimistic. We know, things are tough in U.S. agriculture. I completely understand the uncertainty and the nervousness. I don’t know what the future will bring. This administration has a new way of doing trade policy. I think we’ve all seen that, and we are focused on making sure that we can help U.S. agriculture as much as possible.”

Since 2011 Lauritsen has had responsibility for international trade negotiations and policy development regarding agriculture for the Office of the U.S. Trade Representative. Her expertise includes Free Trade Agreement (FTA) and WTO negotiations on agriculture and sanitary and phytosanitary measures, issues affecting trade in agricultural and food products, plus monitoring and enforcement of existing WTO and FTA commitments for agriculture.

China

After apologizing for the lack of detail she would be able to provide regarding her recent trade mission to China, Lauritsen continued, “Please know that agriculture was front and center of those discussions. I think we had probably the largest agricultural delegation to China between USDA and USTR that I’ve ever been on.”

A June 2, 2018, White House statement explained the meetings were held in Beijing on June 2 and 3 with the discussions centered on “rebalancing the bilateral economic relationship between the United States and China.”

Later, a White House statement released June 4, 2018, added, “The meetings focused on reducing the United States’ trade deficit by facilitating the supply of agricultural and energy products to meet China’s growing consumption needs, which will help support growth and employment in the United States.”

Participants from the U.S. included Secretary of Commerce Wilbur Ross, United States Ambassador to China Terry Branstad, Undersecretary of Treasury for International Affairs David Malpass, Undersecretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney, and United States Trade Representative Chief Agricultural Negotiator Ambassador Gregg Doud. Other experts from the Department of Commerce, Department of Treasury, United States Trade Representative, Department of Agriculture, and Department of Energy also attended.

Previous meetings were held in Beijing one month ago and in Washington, D.C., two weeks ago. The outcome of the recent conversations remains to be seen, Lauritsen said.

Lauritsen outlined several current Chinese trade practices the administration opposes. “We have 48 issues we have tallied we are trying to fix in China because we do not believe they are trading fairly.

“USTR and the president is addressing China’s history of non-economy policy head-on after limited and no success in the WTO and through a series, over the years, of bilateral meetings with China,” Lauritsen explained.

She continued by saying other attempts to resolve the issues since China joined the WTO in 2001 have not been successful. When the USTR announced 301 enforcement actions, China announced an additional $50 billion dollars in retaliatory tariffs against U.S. agricultural products. If imposed, those tariffs will cover nearly 82% of U.S. agricultural exports to China, Lauritsen added.

“U.S. agriculture has been the tip of the spear and borne the brunt of China’s tariffs and other potential retaliation,” she said.

The Trump administration is challenging China’s market price support programs for rice, wheat, and corn. It is estimated that China has exceeded WTO support limits in those three commodities by nearly $100 billion. Lauritsen also said the Chinese have not properly administered their tariff rate quotas for the three crops.

“They are not fulfilling what they committed to do when they became a member of the WTO,” she explained plainly. If they had kept up their commitments, Lauritsen said China could have been importing about $3.5 billion of additional crops, just in the last year.

By not living up to their WTO commitments, China has been able to accumulate massive stocks of key commodities that threaten trading around the world. “USDA estimates that China has 38% of the world supply of corn stocks, 52% of the world supply of wheat stocks, 67% for rice, 22% for soybeans, and 40% for cotton.”

Lauritsen emphasized, “This administration is committed to not only short-term market access opportunities, but to making serious reform in China so that our policies no longer damage the interests of U.S. farmers and ranchers. I understand the concern in farm country, and the USTR is looking for every opportunity to engage with China to address these concerns.”

NAFTA

Turning her attention to NAFTA, Lauritsen expressed a more hopeful, positive tone than Secretary of Agriculture Sonny Perdue did three weeks ago.

Lauritsen said, “I’ve been doing trade negotiations for a number of years, and I can say that in the past year, I don’t think I’ve ever done as much and accomplished as much in one trade negotiation as we have with NAFTA.”

So far seven rounds of formal NAFTA renegotiation have been completed along with a number of additional meetings.

“To date, substantive discussions have concluded in eight subject areas, or chapters as well call them, and four sectoral annexes. That’s industry-specific areas,” Lauritsen explained.

She continued by saying she is particularly proud to announce that a new chapter on sanitary and phytosanitary measures has been completed.

“It’s based off of what we negotiated in the Trans-Pacific Partnership (TPP) to upgrade a country’s rights and obligations for SPS measures. But in the case of this, we even have some improved measures and obligations under NAFTA that we believe will be beneficial for the United States, both on the export side, but at the same time ensures the health and safety of any imports coming into the United States.”

However, despite what Lauritsen sees as significant progress, challenges persist in many areas of the modernization efforts including agriculture, intellectual property, and labor dispute settlement.

“In the immediate future, conversations continue at all levels and the negotiate teams are continuing to meet,” Lauritsen concluded.

New Markets

After filling several critical deputy positions in the last two months, Lauritsen says the USTR is now ready to look at new markets for U.S. products. She said that, although it took far too long to get the political team in place, they are now having strategic conversations about establishing free trade agreements with other countries.

To gain access to new markets, Lauritsen described three critical components. Economic analysis and coordination with other agencies is critical when preparing to negotiate. Additionally, the other country has to want to come to the table, she says adding, “It takes two to tango.”

She called Japan the USTR’s No. 1 interest, especially in agriculture.

“We’re also doing a lot of work looking at potential opportunities in southeast Asia and Africa as well,” Lauritsen added.

Once the United Kingdom leaves the European Union in March 2019, the USTR expects to build upon the groundwork already laid to establish trade agreements.

Enforcement

“We have a keen interest in this administration to use all of our available authority and tools to defend and protect farmers, ranchers, workers, and manufacturers, including appropriate action in the World Trade Organization to make sure that our trading partners abide by the rules that are established,” said Lauritsen, shifting her attention to trade agreement enforcement.

She noted a recent case saying, “We are so close to resolving, for the first time getting access for U.S. poultry into India. We have one shipment, but we need to see a lot more flow of poultry going into India. That is a result of a WTO dispute that we brought.”

WTO disputes are very legalistic and time-consuming, so when possible, the administration seeks other ways to resolve trade issues. After extensive USDA research, it has been estimated that India is dramatically oversupporting its rice and wheat farmers compared with the 10% they are limited to based on WTO obligations. The U.S. is pushing for more transparent data reporting within the WTO.

“We will be having further discussions with India later this month on our findings,” Lauritsen explained.

WTO Leadership

Finally, Lauritsen concluded her prepared remarks by explaining new goals for WTO leadership.

“At the last WTO ministerial in Buenos Aires in December, we called for a reset in the negotiations. We didn’t like the way that they were going. Countries were calling for more distortion, not less, more market protections, not less. And so, we are now working to try and reset those negotiations to try and get on the right track for freer and fairer trade in agricultural trade at the World Trade Organization,” she said.

How Trade Negotiations Happen

As Lauritsen finished her presentation by answering audience questions, she took some time to break down how international negotiations take place.

In her role as assistant U.S. trade representative for agricultural affairs and commodity policy, only about one third of Lauritsen’s time is spent actually negotiating with foreign countries. Negotiating with other U.S. agencies such as the FDA and USDA takes roughly one third of her time. The remaining time is spent discussing with stakeholders. This includes dialogue with groups visiting Washington and Congress to figure out what it is the USTR should do.

The USTR has a staff of about 250 experts. The agriculture office employs 11 people. Other offices handle intellectual property, technical barriers to trade, and subsidies.

At formal negotiations, like the seven recently completed for NAFTA, there may be up to 300 U.S. government experts in attendance.

“They are covering all the different areas of associations, energy subsidies, intellectual property, market access, pharmaceuticals,” Lauritsen explains. “It's a very complicated, well-orchestrated dance in how to move these things forward.”

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