Trade Negotiations

The U.S.-Japan Trade Agreement took effect on January 1, 2020. The agreement provides U.S. wheat the same access that is given to Australia and Canada under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

CPTPP entered into effect on December 30, 2018, which gave Australia and Canada preferential access to the Japanese market. Australia and Canada are the largest competitors for the United States in this market. Without the U.S.- Japan Trade Agreement, the tariff differential had the potential to cut U.S. wheat exports to this very important market for U.S. wheat farmers.

U.S. wheat supplies almost half of Japan’s wheat imports, which are valued at more than $600 million, or about 10 percent of the U.S. export market.

U.S. Wheat Associates welcome the recent ratification by all three countries of USMCA.

USMCA provides many benefits to U.S. wheat farmers by retaining tariff-free access to imported U.S. wheat for long-time flour milling customers in Mexico and important progress towards more open commerce for U.S. wheat farmers near the Canadian border by allowing wheat from varieties registered in Canada to receive reciprocal grading treatment.

Other measures that benefit the wheat industry include the Agreement’s language around agricultural biotechnology which supports 21st Century innovations in agriculture and new language to strengthen disciplines for science-based sanitary and phyto-sanitary (SPS) measures.

USMCA is the successor agreement to the North American Free Trade Agreement (NAFTA). NAFTA entered into force on January 1, 1994 and was unquestionably one of the most beneficial agreements for U.S. wheat farmers. Tariffs on U.S. wheat went to zero, spurring fantastic growth in the Mexico milling industry, which is now one of our largest buyers. With U.S. wheat farmers facing financial hurdles, open access to the Mexican market is more than ever.

U.S. Wheat Associates welcomed Phase 1 of the U.S.-China agreement announced in January 2020. The agreement contains additional rules governing China’s tariff rate quota (TRQ) administration. Chinese policies have long frustrated the use of the wheat TRQ, which eventually led to the U.S. case at the World Trade Organization (WTO) challenging those policies. The new TRQ provisions should ensure better TRQ usage and allow more Chinese millers to access U.S. wheat supplies.

While the deal didn’t directly lift retaliatory tariffs on U.S. agricultural products, it did open a path for importers to apply for exemptions, hopefully leading to the re-opening of China’s imports of hard red winter (HRW), hard red spring (HRS), and soft white (SW) wheat, which were increasing before the tariffs went into effect in March 2018.

The United States won two cases filed against China in the WTO. In late 2016, the United States took a case against China in the WTO on unfair domestic support and market access that distorts the market and disadvantage U.S. agricultural producers of wheat, corn, and rice. The U.S. wheat industry depends on favorable resolutions to these disputes and other trade negotiations with China.

U.S. Wheat Associates commentary:

U.S. Wheat Associates Statement on Major Chinese Wheat Purchase

Phase One Trade Deal Should Restore China’s Demand for U.S. Wheat

Wheat Organizations Encouraged by Progress on Phase One Deal with China

In Spite of Trade Conflicts, U.S. Wheat Farmers Will Not Abandon Customers in China

Trade Conflict with China Already Hurting U.S. Farm Families

Wheat Exports on the Line in U.S.-China Tariff Dispute

China’s Response to New U.S. Tariffs Will Hurt U.S. Wheat Farmers

The United States and the European Union (EU) held negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between 2013 and 2016. TTIP talks have since stalled and the U.S. has agreed to separate negotiations with the United Kingdom (UK) and the remaining 27 members of the EU.

U.S. Wheat Associates has submitted comments on negotiating objectives for the proposed U.S.-UK agreement and U.S.-EU agreement.

The World Trade Organization (WTO) provides a framework for trade negotiations, settling trade disputes, and transparency of trade measures for more than 160 countries that are WTO members. All of these elements create a more predictable environment for buyers and sellers engaged in wheat trade.

Particularly crucial for wheat trade are the WTO Agreement on Agriculture and Sanitary and Phytosanitary Agreement, among others. These agreements govern domestic support programs, import tariffs, tariff rate quotas, phytosanitary measures, export subsidies and several other aspects of agricultural trade.

U.S. Wheat Associates’ priority for WTO negotiations is to improve market access for the wheat industry by lowering tariffs and removing non-tariff barriers. Another priority is to address the rise of non-compliant domestic support in developing countries, such as through the China domestic support case and the India counter notification.

While the failure of the Doha Round means countries need to reassess how to move multilateral trade negotiations forward, the WTO remains an important institution to provide transparency, settle disputes, and liberalize trade.

Currently, the United States has 14 free trade agreements (FTAs) in place covering 20 countries, most of which are net importers of wheat. Click here for a list of completed U.S. free trade agreements.

U.S. Wheat Associates (USW) has always supported negotiating new trade agreements as the best way to lock in duty-free access while preventing competitors from gaining preferential advantages. However, less than 40 percent of U.S. wheat trade is covered under FTAs, underscoring the need for new negotiations with new FTA partners.

Learn more about the need for new trade agreements here.