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Where are the trade agreements, Mr. President, AFBF economists ask

Without trade agreements, U.S. farmers will be subject to whims of the market, economist says.

While everyone seems to be focused on higher crop input costs, the largest group of U.S. farmers wants to know when the Biden administration will work on trade talks.

A Tennessee farmer attending today’s session of the American Farm Bureau Federation (AFBF)’s annual meeting in Atlanta, Georgia, expressed concerns that the U.S. administration doesn’t have an undersecretary of trade and has yet to confirm an ag negotiator. 

“What happens if China stops buying as much as they have been? What happens if Mexico bans genetically modified corn (GMO)? What are the projections on prices if these (trade) things happen?” the Tennessee farmer asked a panel of AFBF economists.

Because more than 60% of the U.S. ag exports are concentrated in five countries, the U.S. export portfolio is susceptible to disruptions like China’s drop in purchases in 2016, the AFBF economists explained.

“Man alive, you lose China and Mexico in the course of over two years, considering over 40% of all U.S. corn production is exported, the price picture turns south pretty quick,” Veronica Nigh, AFBF senior economist says.

Nigh added, “This is why we have to push on the (Biden) administration to say, ‘Thank you for your hardy review (of trade). We appreciate the study, but we are going to need to start seeing some actual action here. The rest of the world is negotiating trade agreements. The Trans Pacific Partnership continued on without us. The rest of the world is forming agreements. We can’t sit on the sidelines.’”

Meanwhile, Nigh told the crowd that the AFBF team has been sending letters to President Biden stressing that there needs to be a Phase Two agreement with China.

Nigh is afraid that without trade agreements, U.S. farmers will be subject to whims of the market. 

The AFBF economists sounded the alarm about the need for the U.S. to get to the trade table in many countries.

“Regarding trade agreements, are we in or are we out? What are we doing?” Nigh asks. “The rest of the world is negotiating trade agreements. The U.S. has not been in a real negotiation for quite sometime. This (Biden) administration hasn’t made any moves to suggest that it has any deals ready to enter into anytime soon.”

President Biden Speaks

During today’s session of the AFBF’s annual meeting, President Biden delivered a video message to the attendees.

Biden reminded the crowd how important farmers are to the U.S. economy. Biden stressed his support to build better roads, bridges, rails, waterways, and build more resilient supply chains to make it easier, faster, and cheaper to get U.S. goods to market.

“Every day you feed and fuel Americans, and I want you to know that every day you have a partner in the White House,” Biden stated via video.

In no direct way did President Biden mention trade talks.

Vilsack on Trade

However, USDA Secretary Tom Vilsack made a live appearance at the AFBF convention.

On Monday, Secretary Vilsack stacked the topic of exports and trade at the top of his presentation.

“I know that 30% of what we (U.S.) grow and raise is ultimately exported around the world. It sends a strong message of the incredible productivity of American agriculture that we can continue to export,” Secretary Vilsack stated. 

The USDA leader stressed the importance of rebuilding trust in the U.S. by enforcing the trade agreements that are already on the books.

“It starts with China. We all know that with the Phase One trade agreement with China we saw sales increase vs. the trade war. Our Chinese friends are about $16 billion light in what they committed to purchase,” Secretary Vilsack says.

As a result, U.S. Trade Representative Katherine Tie continues to push China on living up to its trade agreement, Vilsack says.

“We’re going to continue to press China on complete enforcement and implementation of the Phase One agreement before discussing any trade extensions,” Secretary Vilsack says.

Meanwhile, the USDA leader reminded the AFBF’s convention attendees that the U.S. recently opened up pork sales to India; reduced tariffs on corn, wheat, and pork in Vietnam; and is near agreement with Mexico to buy U.S. potatoes.

Secretary Vilsack didn’t miss his opportunity to applaud the recent panel decision by the USMCA acknowledging that Canada is not complying with dairy tariff rate quotas intended by the multilateral trade agreement between the U.S., Canada, and Mexico. 

China’s Purchases

China’s purchases of U.S. agricultural products jumped from $22 billion in 2016 down to $9 billion in 2018. In 2020, the U.S., China Phase One trade agreement called for China to buy $80 billion worth of U.S. ag products through 2021. 

The Phase One trade agreement with China was allowed to expire in 2021. China missed its target to buy billions of dollars worth of U.S. ag products by a wide margin, but President Biden’s attempt to extend tariffs could threaten the fate of U.S. businesses operating in China, experts say.

Specifically, China bought $57.4 billion of U.S. agricultural products from 2020 through November 2021, it fell short of the $73.9 billion needed to reach the Phase One agreement target.

Over the last 11 months, China has purchased $30 billion of U.S. ag products vs. its total purchases of $130 billion.

“China has a lot of purchasing power. And, what the Phase One agreement has proven is that China has the ability to choose who they purchase their products from. While some believed, before the trade agreement, that they (the Chinese) had to buy from us, they have proven that they don’t have to buy from us,” Nigh says.

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