ASA will continue to engage and monitor the progress the Administration is making in its negotiations with China. We are encouraging the Trump Administration to seek an outcome that removes tariffs and allows for more soybeans to be sold to China. We are also advocating for a swift passage of the USMCA by Congress once it begins consideration in 2019. We have shown considerable support for the Administration’s announcements to negotiate new FTAs with Japan, EU and the UK, including offering recommendations and desired outcomes for the agreements.
In October 2018, USTR formally announced plans to negotiate a FTA between the U.S. and Japan. This was welcome news, as ASA has been encouraging the Administration to engage with Japan since the pull-out of TPP. This became more vital in November, as Vietnam became the seventh country to ratify the CPTPP, which allowed the CPTPP to go into force at the end of 2018. Reducing tariffs and increasing market access are key objectives for ASA in a Free Trade Agreement with Japan. Japan is the fifth-largest market for U.S. soybean exports, with shipments valued at $976 million in 2017.
The Administration also formally notified Congress in October of their intent to negotiate a FTA with the EU and the UK. In January 2019, USTR released its negotiation objectives for the EU-US FTA, which included agriculture. The U.S. will likely not begin negotiations with the UK until after a decision on Brexit is reached.
On September 30, 2018, the U.S., Mexico and Canada announced that they reached agreement on an updated NAFTA trilateral agreement, to be referred to as the United States-Mexico-Canada Agreement (USMCA). This new agreement will return market certainty to these export markets for soybean growers. USMCA will also give farmers access to a robust and vital marketplace while providing countless jobs and boosting national and rural economies.
U.S. soy exports to Canada and Mexico were almost $3 billion in 2017, and U.S. soy exports to Mexico have grown four-fold since the enactment of the NAFTA agreement. Mexico is now the second largest export market for U.S. soybeans and meal, and a total of $43 billion of U.S. agriculture products are exported to Canada and Mexico every year.
The USMCA will need to be ratified by Congress using the Trade Promotion Authority (TPA) timeline and process.
*The USMCA did not resolve the 232 tariff issues between the countries.
ASA supports the doubling of funding for the Market Access Program and the Foreign Market Development Program to $400 million annually for MAP and for $69 million annually for FMD.
Section 301 of the Trade Act of 1974 gives the U.S. Trade Representative broad authority to respond to a foreign country’s unfair trade practices. USTR’s affirmative determination of actionable conduct gives it the authority to take all appropriate and feasible action to obtain the elimination of the act, policy, or practice, subject to the direction of the President. The statute includes authorization to take any actions that are within the President’s power with respect to trade in goods or services, or any other area of pertinent relations with the foreign country.
On July 6, 2018, President Trump announced the enactment of $50 billion in tariffs on Chinese products under the section 301 investigation. As a result of the U.S. enacting its tariffs, the Chinese Department of Commerce reciprocated with its own list of $50 billion of tariffs against U.S. products. This list included a 25 percent tariff on imported soybeans from the U.S. Since the enactment of the $50 billion in tariffs, President Trump has added an additional $200 billion in tariffs on Chinese products.
During the G-20 Summit, Chinese Xi and President Trump reached a temporary agreement to not levy additional tariffs for 90 days while the two governments work to reach an agreement to end the tariff dispute.
Learn about policy issues ASA is working on and which issues need your support.