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USDA to Maintain Offensive Stance With Trade Agreements

China's tariff retaliation could last a bit longer, USDA trade official says.

DES MOINES, Iowa -- The USDA plans to stay on ‘offense’ when it comes to negotiating trade deals for the nation’s farmers, according to a lead trade official.

Knowing full well that the U.S. farmers are squarely focused on getting soybean trading with China back to normal, the USDA is shoring up all of its other markets while trying to get back to the table with its number one soybean customer.

Recently, the U.S., Mexico and Canada made a ‘handshake’ of a trade deal, known as USMCA, improves the exports for the U.S. dairy and wheat farmers.

While visiting Iowa agricultural leaders, Thursday, Ted McKinney, USDA Under Secretary for Trade and Foreign Agricultural Affairs, told reporters afterward that the USMCA trade picture is looking more optimistic.

“This is a good template that we can take to other countries. Any deal that is a win-win with countries that want to do a deal with the U.S. is positive,” McKinney says.

In addition to the deal with the former NAFTA countries, the United States Trade Representative has announced new trade negotiations with Japan, United Kingdom, and Europe.

“Europe will be a tough one,” McKinney says. “Their precautionary principle mentality has taken regulations to the point that farmers are denied many technologies that we have come to know, enjoy and find value in.”

He added, Europe is the U.S. ag sector’s fourth or fifth most significant export market.”

Other countries that the USDA is eyeballing for trade deals include: the Philippines, some African countries, Vietnam and Indonesia, McKinney says.

South Korea is one of the most reliable export markets for U.S. agricultural goods, according to the Foreign Agricultural Service (FAS).

In a report released Monday, the FAS noted that the United States-Korea Free Trade Agreement (KORUS) entered into force on March 15, 2012, significantly increasing export opportunities for U.S. agriculture.

Agricultural exports from the U.S. to Korea grew 11 percent last year, from $6.2 billion in 2016 to nearly $7 billion in 2017. Korea was the United States’ sixth largest market for agricultural exports in 2017, with the U.S. agricultural trade surplus increasing by 12 percent from 2016 to $6.3 billion in 2017, according to the FAS report.

Top U.S. agricultural exports to the country include beef, corn, fresh fruit, and pork. Collectively, these top four commodities accounted for 42 percent of total U.S. agricultural exports to Korea in 2017, according to the FAS data.

Southeast Asia is a major market for U.S. agricultural products, ranking as the third-largest regional market in 2017, behind East Asia and North America, according to a recent published report from the Foreign Agricultural Service (FAS).

U.S. exports to Southeast Asia have grown quickly over the last decade, with sales of farm and food products totaling nearly $11.8 billion in 2017, representing a 68-percent increase since 2008.

The FAS report stated that Indonesia, Malaysia, and the Philippines, are among the region’s high-growth import markets for agricultural products, accounting for nearly 55 percent ($6.4 billion) of U.S. agricultural exports to Southeast Asia in 2017. “Other fast-growing markets in the region are Vietnam and Thailand, which together accounted for more than half of all U.S. agricultural export growth to the region since 2008,” the FAS stated.

“When we say we are on offense, we are not trying to cast fear in our partners eyes. In other words, the size and scope of U.S. ag products is not going to take their countries over. Trade is a two-way street. If I win and they lose, that is not a very productive trading partnership,” McKinney says.

China, U.S. Trade Stalemate

The USDA is first trying to shore up existing markets and trying to open up new ones. But, its efforts on moving the U.S., China trade tariff disagreement forward are moving, only not as fast as it would like.

“I think we are in this with China for a little while longer,” McKinney says. It won’t be days, it won’t be weeks. And I hope it’s not years. The Chinese know exactly what we want. And farmers have suffered from some of the Chinese (trade) behaviors.”

The story is well known about two China men that were caught stealing germ plasm from an Iowa soybean field.

Specifically, McKinney says China needs to tell the U.S. that it is going to stop stealing U.S. ag products and other products from other sectors.

“And we want confirmation that China is going to quit forcing U.S. companies into technology transfer agreements,” McKinney says.

He added, “We’re certainly not going to stop right now and restore trading without getting some of these things fixed,” McKinney says.

Despite the trade war, McKinney says the USDA has a warm relationship with China.

“If we were told today that we have a green light on negotiating talks, we could be on a plane tomorrow, at least as far as the ag sector goes,” McKinney says.

 While the Chinese are trying to telegraph that they are not sure what the U.S. is asking, that simply is not true, the USDA trade official stated.

“They (Chinese) know exactly what we need,” McKinney says.

Iowa Secretary of Ag Mike Naig added that the issues with China, on ag trade, need to show some movement, because it’s top-of-mind for the state’s farmers.

“We need to see some urgency, we need to see some action on China, but I think farmers are encouraged by the momentum being seen with USMCA, Japan, and rolling some of those agreements into China to try and continue that success,” Secretary Naig says.

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