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Vilsack trade view: ‘Over-reliance on China,’ no deal with EU soon

China is forecast to be the No. 1 customer for American farm products this year, with purchases of $35 billion, or about one-fifth of all U.S. ag exports.

Ag exports, a key part of U.S. farm revenue, are expected to generate 36 cents of every $1 in cash income this year, thanks to high commodity prices as the world recovers its appetite and the pandemic recedes. Agriculture Secretary Tom Vilsack said the country ought to diversify its sales to a broader range of markets.

“We need to be less reliant on one or two countries and more reliant on a number of countries,” he said during the Forbes Future of Food Summit online. The secretary did not go into details, but China, Canada, Mexico, and Japan account for more than half of U.S. farm exports, while dozens of other countries, despite large populations or vibrant economies, barely register as markets.

“I think there’s an over-reliance on China right now. That’s a big market, a big opportunity for us,” said Vilsack on Wednesday. “Obviously, we’re much better off without a trade war than we were with a trade war with China in terms of agriculture. But that’s a complicated relationship, and anything can disrupt it at any point in time. Which is why I think it is going to be important, at the appropriate time, for the administration to take a look at where there are new partnerships, new arrangements, new connections.”

China is forecast to be the No. 1 customer for American farm products this year, with purchases of $35 billion, or about one-fifth of all U.S. ag exports. In 2018, during the worst of the trade war, U.S. sales to China fell to $10.1 billion and overall exports fell by 5 percent. The two nations agreed in January 2020 to de-escalate the dispute, though it has not been resolved.

A new trade agreement with Europe is unlikely until the EU shows a willingness to negotiate on the “politically sensitive and difficult issues that they have on agriculture,” said Vilsack, citing so-called geographical indications, GE crops, and the use of growth stimulants in livestock. Those issues are just part of a long list of disputes between the trading partners. The EU accounts for 18 percent of U.S. food and agricultural trade.

When it came to expanding U.S. markets, Vilsack spoke of “deepening our presence in Southeast Asia, focusing our efforts eventually in Africa, working to make sure we’re maximizing our opportunities in Central and South America, and making sure that agreements that are in place are actually followed through — certainly USMCA being a prime example.” The Biden administration has filed a trade complaint under the U.S.-Mexico-Canada Agreement, charging that Canada manipulated its dairy quotas to limit U.S. imports in violation of the trade pact.

In Asia, the United States might explore membership in the successor to the Trans-Pacific Partnership trade agreement, said Vilsack. “Can we get back into that? What would we have to give and what could we get? Those are things that have to be determined.”

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