U.S. Wheat Associates (USW) supports free trade through multilateral, regional and bilateral trade agreements. USW works closely with the USDA Foreign Agricultural Services (FAS) and the Office of the U.S. Trade Representative (USTR) to ensure favorable terms for wheat exports in all trade negotiations.
- United States and Japan
U.S. Wheat Associates (USW) supported the original Trans-Pacific Partnership agreement when it was signed February 2016, noting at the time that it would serve as a platform for trade expansion in the Asia-Pacific region. Subsequent withdrawal from TPP by the United States was a blow, but at least it did not affect any existing market access arrangements.
That changed when the remaining eleven members (TPP-11) signed an updated agreement without the United States on March 8, 2018. TPP-11 is a looming disaster for U.S. wheat farmers and related industries. U.S. wheat exports to Japan – a critical market for U.S. farmers – will be at serious risk under TPP-11, setting up a catastrophic loss of sales.
TPP 11 would gradually discount the effective tariff millers pay for imported Australian and Canadian milling wheat from over $150 to about $85 per metric ton (MT). This process began on December 31, 2018, followed by a second round of cuts on April 1, 2019. This discount for competitor wheat will continue to grow until 2026, when U.S. wheat exports will be at a $65-70/MT disadvantage.
U.S. Wheat Associates supported reengaging with TPP countries to accede to the agreement as quickly as possible and prevent this massive loss to U.S. farmers. Short of that, a bilateral agreement with Japan is the next best option to prevent permanent losses in this market.
- United States, Mexico and Canada
In November 2018, the three North American countries signed the United States, Mexico, and Canada Agreement (USMCA), the sucessor agreement to the North American Free Trade Agreement (NAFTA). USMCA provides several benefits for wheat farmers – most importantly continued duty-free access to Mexico. There are also important provisions on sanitary and phytosanitary measures, biotechnology, and the treatment of U.S. wheat delivered to Canadian elevators.
NAFTA entered into force on January 1, 1994, and was unquestionably one of the best agreements ever for U.S. wheat farmers. Tariffs on U.S. wheat went to zero and spurred fantastic growth in the Mexico milling industry, which is one of our largest buyers. With U.S. wheat farmers facing financial hurdles, open access to the Mexican market is needed now more than ever. A prosperous Mexico is crucial for U.S. wheat farmers. It fuels a highly sophisticated milling and baking sector that knows how to use U.S. wheat. But these customers can also adapt to other wheat supplies, as seen in the growing volume of non-NAFTA wheat entering the Mexican market in recent years.
Prior to NAFTA, state intervention and import tariffs kept U.S. wheat exports to the Mexican market very low. NAFTA ended both and the newly opened market allowed U.S. wheat imports to skyrocket to an annual average of almost 3 million metric tons (more than 100 million bushels) today. In the 2016/17 marketing year, Mexico was the largest U.S. wheat importer in the world.
U.S. Wheat Associates strongly opposes new tariffs on imports from Mexico.
- United States and China
The United States and China have deep disagreements about China’s trade practices. This has spilled over into tariffs on imports from both countries, including wheat from the United States. Talks are ongoing with the goal of rebalancing the world’s largest bilateral trade relationship.
U.S. Wheat Associates commentary:
- United States and Europe
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.
- World Trade Organization (WTO)
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.
- Other Trade Agreements
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.