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Fair Trade, You Say? Government Facts Tell a Different Story

Fair Trade, You Say? Government Facts Tell a Different Story

The global unfair trade practices that hurt American farmers and ranchers every day aren’t exactly state secrets, despite claims by opponents of agriculture who blindly argue that they don’t really exist or matter.

Every year, the U.S. government publishes a lengthy list of worldwide trade cheating called the National Trade Estimate. And, if anyone out there in the policy world still thinks U.S. agriculture isn’t being cheated, we welcome you to take a look.

But, just in case you don’t have time to read the 504-page report, we pulled a few nuggets to show you just how hard it is out there for American farmers and ranchers. And this doesn’t even include all the subsidies and unfair trade practices in India, Thailand, Brazil, and a whole host of other ag competitors.

China
From the intellectual property theft to massive stockpiles of steel and aluminum, China’s trade relationship with the U.S. is strained in many ways.

When it comes to agriculture, China is our largest export market. But America’s total trade deficit with China is significant at $375.2 billion in 2017. As the USTR notes in its report, China’s inconsistent enforcement of regulations and selective intervention create an unpredictable market.

  • China’s 2015 Food Safety Law has been disastrous for exports of dairy, infant formula, seafood, grains and oilseeds. When the international community opposed it, China agreed to an implementation delay but still moved to require an unnecessary official certification of all food products, even low-risk exports.
  • Beef, to some extent, is back on the table in China after years of an outright ban based on unscientific political whims. But China still doesn’t follow international standards on beef and maintains a ban on compounds that are widely used in the industry.
  • Subsides continue to distort the export market and price for many commodities in China. The government provides subsidies and support for cotton, rice, wheat and corn among others. And, China doesn’t follow the market access it promised when it entered the WTO through its tariff-rate quota system.

Canada
Our northern neighbor may be the largest good export market we have but the total trade imbalance for all U.S. goods is significant coming in last year at a whopping $17.5 billion.

The NAFTA reboot, known as the United States-Mexico-Canada Agreement or USMCA, aims to correct some of the imbalance but a look at the issues in agriculture shows just how significant the problem is for American farmers and ranchers.

  • Canada’s supply management system for diary, chicken, turkey and eggs severely limits the ability of U.S. producers to increase exports and means Canadian consumers pay more for these goods.
  • Dairy alone has been a huge problem for U.S. producers with an unfair pricing scheme called Class 7 that is aimed at decreasing U.S. imports of dairy components and increasing Canadian exports of skim milk powder.
  • U.S. grain producers also face a big challenge in Canada with a system that prevents them from receiving a premium grade for grain and instead only receiving a label for the country of origin, which unfairly tilts the market toward domestic producers.

Mexico
Our southern neighbor remains the second largest export market but, like Canada, the total trade deficit – including ag and non-ag products – is large coming in at $71.1 billion last year.

In agriculture, America fights a never-ending battle against unfair pricing, court orders, labeling and subsidies that restrict our exports. Let’s hope USMCA also does some good in Mexico but for now, the problems persist.

  • The international game of hot potato that Mexico and its court system have played with U.S. potato growers is just one area where unfair regulations have hurt American growers. Mexico, back in 2003, had banned the import of potatoes beyond 16 miles from the border. But after a scientific study in 2011, Mexico relaxed the requirement and opened up to potato imports. And then the Mexican potato industry challenged that move in court in 2014. The Mexican government issued new decrees in 2016 aimed at opening market access but the Mexican potato industry again won court injunctions. The legal challenges are ongoing and the USDA and USTR are still working to open market access for potatoes.
  • Raw milk is another area where Mexico has blocked U.S. producers. American dairies have been unable to ship raw milk to Mexico since 2012 because the Mexican government determined the veterinary import requirements didn’t apply to the product. In 2017, the U.S. continued to hold talks with Mexico on this requirement.
  • Meanwhile, and this move is not noted in the USTR’s report, Mexico gave the European Union a sweet deal on common food names related to cheese that blocked American cheese producers from selling their products in Mexico.

The USTR’s annual report is fascinating look at just how unfair the global market really is when it comes to everything from potatoes to plumbing fixtures. And it shows how truly critical a strong farm policy is to American farmers and ranchers.

The American agriculture sector is the most efficient in the world and produces the highest quality food at the best price. Our farmers and ranchers would love to compete on a level playing field. But at the end of the USTR’s 504-page report, one thing is clear: the playing field is far from level.

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