A turbulent year in the industry filled with both triumphs and setbacks
WASHINGTON The U.S.-Mexico-Canada Agreement, which modernized and replaced the 26-year-old North American Free Trade Agreement, was the first of the administration’s major trade accomplishments in 2019. On the other hand, there were other situations where trade success was more qualified. The December agreement in the trade war with China was more of a cease-fire than a peace treaty, and the most difficult issues between the US and China have still not been thoroughly discussed, much less settled.
One of the biggest challenges facing U.S. trade negotiators in late 2019 was getting the House of Representatives to support the U.S. M. C. A. They overcame this obstacle by collaborating with House Democrats and organized Labor to include provisions in a revised U. S. M. C. A. that the progressives could support. Canada and Mexico accepted the amended U.S.M.C.A., which was overwhelmingly adopted by the House on December 19 by a vote of 385 to 47.
The U.S.M.C.A. was anticipated to be approved by the Senate in January and sent to President Trump for his signature.
The agriculture and food industries were ardent proponents of the U.S.M.C.A. All agricultural and food goods that are already free of tariffs under NAFTA will continue to be so under the deal. A portion of the present Canadian wheat-grading system that discriminated against U.S. wheat shipped across the border to Canadian grain elevators is eliminated under the agreement, which also increases access for American producers to the Canadian market for dairy, poultry, and eggs. Agricultural biotechnology, including novel technologies like gene editing, is also explicitly included by the U.S.M.C.A. in order to promote innovation and lessen trade-distorting regulations.
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The future of China is still unclear.
On December 13, Mr. Trump declared that a trade agreement, consisting of a phase-one increase in tariffs on each other’s exports, had been struck, capping nearly 21 months of trade war between the US and China. The news was made only two days before the US was set to impose further tariffs totaling approximately $156 billion on consumer goods made in China.
The details of the agreement, which Mr. Trump stated would be signed in the White House on January 15, were not expected to be made public until after the signing ceremony. However, U.S. negotiators revealed that in addition to stopping the planned tariff hikes, the United States agreed to halve the tariff increases on $120 billion worth of Chinese goods that were imposed in September, from 15% to 7.5%. Yet, the majority of Chinese goods will continue to be subject to additional US trade war taxes.
China made two main commitments in return: it will significantly boost American food and agricultural product imports and strengthen protection for American intellectual property rights. China promised to buy $40 billion worth of agricultural and food items from the US each year, according to U.S. trade officials. Prior to the trade war, the maximum amount of US agricultural exports to China was approximately $27 billion.
We eagerly awaited details of the agreement, including a breakdown by item that would reveal just how much China will commit to buying in terms of American food and agricultural products. The food and agriculture community was highly skeptical about China’s ability to buy what US trade officials claimed it would. There were hints that the Trump administration was ready to bring back the tariff.
2019 saw the US sign trade agreements with Brazil and Japan as well. The Trump administration negotiated the U.S.-Japan Trade Agreement, primarily to guarantee that American farm and ranch products would have the same trade conditions and access to the Japanese market as those granted by Japan to its fellow members of the Comprehensive and Progressive Trans-Pacific Partnership, such as Australia and Canada. The approach to Japan was required when Mr. Trump, in his early days as president, removed the United States from the Trans-Pacific Partnership, which later evolved into the C.P.T.P.P.
Brazil agreed to a duty-free tariff rate quota (T.R.Q.) of 750,000 tonnes of wheat upon joining the WTO in 1994, and the United States was able to convince it to implement this quota each year. Brazil is the world’s fourth-largest importer of wheat. While duties on wheat from other origins, such as the United States, are normally fixed at 10%, it imports wheat duty-free from its MERCOSUR trading bloc partners, particularly Argentina. Brazil agreed to implement its W.T.O. duty-free T.R.Q. for 750,000 tonnes of wheat annually as part of the Brazil-U.S. deal, allowing American exporters and producers to compete for a piece of at least that market.