LegiStorm

Summary:

Trade, particularly exports, is critical to the vitality of American agriculture. On average, foreign markets absorb about one-fifth of U.S. agricultural production, thus contributing significantly to the health of the farm economy. The positive economic effects of trade in farm products are felt well beyond the farm gate. Farm product exports make up about 10% of total U.S. exports and contribute positively to the U.S. balance of trade. The economic benefits of agricultural exports also extend across rural communities, while overseas farm sales help to buoy a wide array of industries linked to agriculture, including transportation, processing, and farm input suppliers. Moreover, most of the future growth in food demand is expected to occur in developing countries. Congress has traditionally displayed a keen interest in agricultural trade issues given their importance to farmers and ranchers and to the overall economy. The plethora of agriculture-related policy questions and trade issues in play as the 115th Congress convenes suggests that trade policy in general, as well as specific farm trade issues, may continue to draw congressional oversight and input. One ongoing concern has centered on the trade-distorting domestic policies abroad, including in China, which ranked as the second largest market for U.S. farm exports in FY2016. In late 2016 the Office of the U.S. Trade Representative (USTR) launched two trade enforcement actions against China at the World Trade Organization (WTO) over its administration of tariff rate quotas for imports of wheat, rice, and corn and over its domestic support measures for these crops. On the multilateral front, President Trump has ordered the withdrawal of the United States from the Trans-Pacific Partnership (TPP) regional free trade agreement (FTA), which the United States and 11 other Pacific-facing nations signed but which Congress has not ratified. As negotiated, TPP would have significantly improved access for U.S. farm exports. USTR continues to negotiate with the European Union (EU) over a regional FTA—the Transatlantic Trade and Investment Partnership (T-TIP)—involving a number of thorny agricultural issues that have proved to be impediments to trade, including differences over geographic indications (GI) and discontinuity in regulating the application of biotechnology to agricultural production, as well as access for these products to commercial markets. The United Kingdom vote to exit the EU has added to the already uncertain prospects for T-TIP. At the global level, further liberalization of agricultural trade is an objective of the Doha Round of multilateral trade negotiations under the WTO, but those talks have been at an impasse for several years. Of concern to the developing world, the Generalized System of Preferences (GSP)—which provides duty-free tariff treatment for certain products from developing countries and benefits from $2.6 billion in U.S. agricultural imports in 2015—will expire at the end of 2017 unless Congress extends it. Beyond trade agreements, numerous other trade issues of importance to U.S. agriculture may be of interest to Congress. For one, suspension agreements that limit Mexico's sugar exports to the United States have come under increasing criticism from U.S. stakeholders and may have implications for the U.S. sugar program. In Cuba, U.S. farm and food interests see potential to meaningfully expand exports, but a prohibition on private U.S. financing is viewed as a major obstacle to this end. U.S. dairy interests object to a Canadian dairy ingredient pricing strategy that it believes is aimed at displacing U.S. ingredient exports. U.S. exports of beef, pork, and chicken continue to face bans and trade restrictions over disease outbreaks that are inconsistent with international trade protocols. Examples include China's ongoing bans on imports of U.S. beef and poultry and restrictions imposed by several foreign markets on U.S. ractopamine-fed pork. As the 115th Congress convenes, the United States has settled two long-running WTO challenges to its policies: one to its cotton program and another to its country-of-origin labeling (COOL) law.