The Biden administration has made it clear it won't use the 14-nation Indo-Pacific Economic Framework for Prosperity to negotiate lower tariffs on American ag exports, but U.S. officials insist there are plenty of non-tariff trade barriers to be resolved, and U.S. farm groups have high hopes as talks continue this week in San Francisco during a seventh round of negotiations.
Producers and exporters of dairy, pork, beef, corn, cherries, oranges, grapefruit and many other commodities face a broad array of barriers to trade throughout the IPEF countries that the U.S. is negotiating with — Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam.
India is the source of many trade barriers to U.S. farm commodities, but the country opted not to participate in the IPEF trade pillar.
Some of the demands for action are specific to individual countries — like the National Potato Council’s call for South Korea to lift its ban on fresh potatoes from 13 states — but some are calls for broad new efforts like setting unified language on accepting genetically modified crops or maximum residue levels for crop protection chemicals.
GRAINS
When the trade pillar is finalized, U.S. Grains Council Director of Trade Policy Andrew Brandt wants to see a deal that will stop countries from using their ability to adjust maximum residue levels, or MRLs, as a means to curtail imports.
Often, countries will “cherry-pick a specific crop protection chemical and suddenly lower the MRL, which is kind of like a non-tariff way of blocking” imports of a commodity, Brandt said. “Instead of touching the tariff that impacts everyone, they pick a specific crop protection chemical … used in one country and their production system, ratchet down that MRL and then boom, you've suddenly blocked all the grain from said country without actually touching the tariffs.”
Andrew Brandt, U.S. Grains CouncilCropLife America agrees that MRL policy shouldn’t block trade.
“The United States and other countries are cooperating on pesticide reviews, and the U.S. government should use IPEF discussions to expand this sort of cooperation, as this will benefit farmers across the region,” the group says in a submission to the USTR on the IPEF trade pillar. “Moving towards MRL harmonization in the Indo-Pacific — or at least reducing disparities — can help reverse that backtracking and provide tangible results for producers in the region by reducing policy risks to their exports.”
DAIRY
The U.S. Dairy Export Council, like many farm groups, insists the best thing that could come from the 14-nation pact would be tariff reductions. Thailand, for example, levies a 30% tariff on U.S. cheese — a duty that does not apply to cheese from New Zealand because of a separate trade deal.
But barring tariff cuts, USDEC would very much like the U.S. to convince Indonesia to reform its requirements for U.S. dairy facilities to register with the government before they can export, said Shawna Morris, senior vice president for trade policy at the group.
“In Indonesia it's taking companies upwards of three years, from the time that they submit their application … to when the facility is actually able to begin shipping to the market,” Morris said in an interview. “It's a great market for us, one of our top 10. Once companies are approved, it tends to be for us a really good, reliable trading partner. But the challenge of getting new facilities actually greenlit in terms of being able to ship has been consistently problematic.”
The issue is bigger than just Indonesia and dairy, said Morris. Problems getting foreign governments to register U.S. facilities are “expanding globally in a variety of other markets,” and a new standard set in IPEF could help set a global example “as the U.S. is trying to deal with these issues cropping up in a variety of other places.”
PORK
Demands by foreign governments for lengthy facility registrations also stymie exports of U.S. pork, almonds and potatoes, according to farm groups.
The U.S. exported a meager $555,300 worth of pork to Indonesia last year, and the country’s “unnecessarily cumbersome and laborious” registration process for U.S. pork plants is part of the problem, according to the National Pork Producers Council.
While Indonesia is a problem, Australia, Thailand, Malaysia and New Zealand also maintain non-tariff barriers that the NPPC wants eliminated.
While Australia imported $133 million worth of U.S. pork last year, the U.S. could be shipping a lot more if not for the country’s ban on fresh pork and bone-in products — a consequence of Australia’s concerns over Porcine Reproductive Respiratory Syndrome. It’s an unjustified ban, according to NPPC, which says it “continues to find no science or legal justification for these barriers and continues to push for full market access.”
As for Thailand, the country “maintains a de facto ban on U.S. pork imports” by refusing to set maximum residue levels for the widely used growth-promoting drug ractopamine.
Riley Bushue, Northwest Horticultural Council APPLES and PEARS
The U.S. has been trying to gain access for its apples and pears to South Korea, Australia and Japan for about 30 years, and the Northwest Horticultural Council is hoping new progress can be made under IPEF, said Riley Bushue, the group’s director of congressional relations and export programs.
The three IPEF nations continue to cling to sanitary and phytosanitary barriers blocking the American fruit, but the council stresses they are all unscientific and unjustified.
“It shouldn’t take decades to resolve technical, scientifically based issues when there’s plenty of research to support our ability to export to countries around the world,” Bushue told Agri-Pulse.
CITRUS
California citrus producers export roughly 30% of what they grow, and 11 of the top 15 export destinations are IPEF countries, according to California Citrus Mutual. While high tariffs are perhaps the biggest barrier — Vietnam has a 16.5% rate that can be raised as high as 18.8% — the group stressed that it hopes USTR will persuade both South Korea and Australia to lift their bans on grapefruit from Texas.
The group recognizes there are fears overseas about the spread of citrus greening disease, but says those fears are unfounded — and wants USTR to communicate that message.
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“It is well documented that the disease is not transmitted by fruit,” California Citrus Mutual said in a letter to USTR.
And when it comes to Japan, the country needs to remove a safeguard measure that boosts tariffs by 20% if California exports rise above 26,435 tons between Dec. 1 and Mar. 31.
CHERRIES
The request to USTR negotiators from the California Cherry Board is aimed almost exclusively at Japan, a country that imports more than $24 million worth of the western fruit annually. The group said in a letter to USTR that Japan allows California cherries to enter without fumigation, but the penalty is too high if a forbidden pest is discovered in a shipment. If that happens, the board says, Japan shuts down imports entirely.
“For several years, the industry has been working with USDA to request Japan’s Ministry of Agriculture, Forestry and Fisheries change its penalty structure to suspend the specific orchard or grower rather than the entire industry,” the group said. “Thus far, Japan has voiced reluctance to enact such a change.”
IPEF would be an ideal forum to convince Japan otherwise, the group said.
But California cherry growers are also hoping USTR will lean on Australia to allow for immediate inspection of imported cargoes, even if they arrive on a Saturday or Sunday. Fresh cherries are a “highly perishable commodity,” but if an importer doesn’t request inspection by noon on Friday, shipments that arrive over the weekend will have to wait until Monday or Tuesday.
IPEF NEGOTIATIONS
It’s still unclear which of the issues that U.S. farm groups are highlighting will be resolved, but the answers may be coming soon. Chief Agriculture Negotiator Doug McKalip has said in recent months that the trade pillar should be finished in November.
Furthermore, USTR has foreshadowed its priorities for negotiating the ag section of the trade pillar through postings in the Federal Register. In a March notice, USTR said it has proposed language in the framework “aimed at increasing transparency and regulatory certainty for agricultural exporters and importers, as well as encouraging collaboration and innovation in areas such as sustainability and food security.”
The USTR statement also looks to address key concerns from farm groups about the difficulties in getting U.S. production facilities registered to export commodities. The proposed IPEF text “includes provisions related to transparency in import licensing procedures for agricultural products, certification requirements, and equivalency to ensure that any requirements for importation are clearly communicated to regional agricultural producers.”
The current round of IPEF negotiations is scheduled to run through Sunday. The Biden administration said trade ministers are adding emphasis to this round of talks by meeting in person next Monday and Tuesday in San Francisco to “discuss the substantial progress made” since negotiators concluded talks on the supply chain pillar in May.
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