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U.S.-Cuba relations have been up and down like a roller coaster in the 11 years since the last U.S. wheat export shipment to Cuba. Last week, U.S. Wheat Associates (USW) staff traveled to the island nation as part of a U.S. agricultural conference to see and hear firsthand about trade opportunities – despite frosty bilateral relations.

There is no clearer example of that roller coaster than in the U.S. embassy. After being shuttered for more than a half-century, the embassy was reopened in 2015 during the Obama administration as a sign of goodwill and a hopeful return to a bilateral relationship. Closed in 2017 after never-proven allegations Cuba had perpetrated a “sonic attack” on diplomats, it now operates on a limited basis. Yet relations are so low that the U.S. government has refused to repair recent hurricane damages.

Image shows a meeting in Cuba of the U.S. Agriculture Coalition for Cuba

Cuban Meeting. The U.S. Agriculture Coalition for Cuba sponsored a recent meeting for U.S. agricultural representatives, including USW, with Cuban officials and business interests.

Demanding Respect

That roller coaster in relations continued in the recent conference, where high points about the potential of increased trade and renewed relationships were mixed with harsh rhetoric. Throughout three days of meetings and events with government officials, private business owners and conference attendees, the U.S. delegation repeatedly heard about the harm of the U.S. embargo on Cuba, and especially about tightened measures put into place under the Trump administration. Listing Cuba as a state sponsor of terror and further restricting the ability of U.S. business operations garnered a great deal of ire from the Cuban speakers.

Though conducting business with Cuba is more bureaucratically challenging for U.S. companies than nearly anywhere else on earth, Cuba can and does still purchase some U.S. commodities. The prime example is chicken. Cuba now ranks as a top-three destination for U.S. chicken exports.

Complex Situation

The competitive situation for wheat is much more complex than the products they currently purchase. While the United States has a proximity and logistical advantage over any other wheat supplier, Cuban officials said other countries routinely offer generous credit terms of one to two years. Access to any level of financing has proved particularly important to Cuba, given its relative shortage of hard currency.

Agricultural trade with Cuba was authorized under strict terms with the passage of the Trade Sanctions Reform and Export Enhancement Act of 2000. However, the act required onerous payment terms such as full cash payment in advance of exports, use of third-country banks and travel restrictions on cargo vessels between the two countries. Though that policy sparked sales of U.S. commodities for a few years, the Cuban economy continued to struggle, and those terms have become overbearing. The result has been widespread economic distress for the Cuban people, who are now challenged to secure affordable food. Their stories include bread shortages and state-sponsored food ration supplies being unavailable.

Cuba Needs Wheat

Before COVID, Cuba regularly imported an average of 750,000 metric tons of wheat. That volume would likely make Cuba a top-ten market for U.S. wheat under a normal trading relationship. However, a true “normal” relationship would extend beyond just access to private credit and connections between U.S. and Cuban banking sectors to facilitate trade. For Cuba to reach its full potential as a U.S. commodity export destination, it would likely require the enablement of two-way trade – selling Cuban produce and processed products in the U.S. market. That development would go beyond the agricultural sales provisions of the laws that currently allow one-way trade with Cuba.

End the Embargo

While that may be a worthy goal of opening up to Cuba, in the meantime, U.S. growers need Congress to act. Access to the same payment and shipping terms offered to any other wheat market is a good and reasonable starting point.

The United States has long had a policy of not using food as a weapon. It is past time for us to be honest with our own rhetoric in the case of our closest Caribbean neighbor.

By USW Vice President of Policy Dalton Henry, who represented USW on the trip sponsored by the U.S. Agriculture Coalition for Cuba.

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It is a country that imports about 800,000 metric tons of wheat each year, a mere 90 miles from the United States. Yet the Cuban wheat market has long been a source of optimism and frustration for U.S. wheat farmers. With the change in administrations, there is hope for re-engagement with Cuba, but ultimately the 60-year-old embargo and associated policies still stand as a solid barrier to beneficial trade.

General public opinion polls on Cuba policy consistently show most Americans favor more engagement, the last decade has seen a roller coaster of changes in U.S. policy. Under the Obama-Biden Administration, there were efforts to establish a new relationship and relax tensions. This included a new interpretation of “cash in advance” rules that apply to payment for any agricultural commodities, bilateral exchanges by technical staff in regulatory agencies and the reopening of the U.S. embassy in Havana. However, none of those changes resulted in actual wheat purchases. Then the Trump Administration further restricted trade by limiting any business conducted between American companies and state-owned companies (such as flour mills) in Cuba.


“Wheat is an important food grain that should be above politics, but the embargo will likely have to end before wheat farmers can help … feed the Cuban people.”


With Biden’s return to the White House, Cuba watchers are anxiously awaiting the next curve in the roller coaster ride and are optimistic the administration will return to the Obama-Biden policy of re-engagement. However, any realistic effort to expand ag trade with Cuba needs to focus on the other end of Pennsylvania Avenue by working to secure meaningful change within the halls of Congress and addressing the bipartisan opposition to trade with Cuba.

Just such a Congressional effort was launched last week by U.S. Senators John Boozman of Arkansas and Michael Bennet of Colorado with the introduction of the Agricultural Export Expansion Act. That bill would allow private financing of agricultural commodities by U.S. companies – a small first step toward normalizing the trading relationship, but an important one to put U.S. companies on a near level playing field when working with Cuban buyers. Several U.S. agricultural organizations including U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) signed a letter of support for the effort as ad hoc members of the United States Agricultural Coalition for Cuba.

More Legislation

The Ag Export Expansion bill is not the only pro-normalization effort within Congress. U.S. Senators Jerry Moran of Kansas, Amy Klobuchar of Minnesota and Patrick Leahy of Vermont, all long-time Cuba trade advocates, earlier this year introduced the Freedom to Export to Cuba Act, which would lift substantial portions of the embargo, including restrictions prohibiting transactions between U.S. and Cuban firms.

Farmers are right to be interested in opening the Cuban wheat market. Cuba produces no wheat domestically and would be a substantial U.S. market if government barriers were to be lifted. But for any of that optimism to come to fruition, it is going to take a literal act of Congress.

“Wheat is an important food grain that should be above politics,” said former USW President Alan Tracy in 2017, “but the embargo will likely have to end before wheat farmers can help meet the increasing demand for agricultural products to help feed the Cuban people.”

By Dalton Henry, USW Vice President of Policy

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Dispute cases in the World Trade Organization (WTO) take a notoriously long time to resolve, but there seems to be at least an outside chance one of the longest-running disputes affecting wheat trade could be nearing its last chapter. Three months ago, the United States and the European Union paused their respective punitive tariffs to work toward a negotiated solution in the long-running civil aircraft dispute over subsidies – often referred to as the Airbus/Boeing disputes. That détente temporarily ended tariffs on non-durum U.S. wheat imports.

Now the two governments are set to meet at a major summit next week, where trade, including the aircraft dispute, is expected to be a major topic.

High Hopes

The optimists have had high hopes for an aircraft dispute resolution since the Biden Administration took office. The campaign rhetoric included reinstating international partnerships and rebuilding multilateral institutions. The aircraft dispute even got major billing on Capitol Hill during then-USTR nominee Katherine Tai’s confirmation hearing. When asked about the potential for a resolution, she wittily quipped that “I would very much be interested in figuring out … how to land that particular plane.”

Both sides have been mum about details of what a resolution might look like, with only until July 11 before tariffs are set to snap back into place.

On The Other Hand

This leads us to the other side, where the cynics (your author included) strongly supported the four-month tariff suspension but know how hard it is to resolve such an intractable dispute in such a short time. The slow pace of confirming political nominees at USTR supports that opinion. The agency has an incredible team of career staff, and Ambassador Tai is quite capable of resolving the dispute. But will that be enough to tips the scales in favor of a long-term resolution? In search of an answer for that question, all eyes turn toward the upcoming U.S.-EU summit, slated for mid-June in Brussels.

Working toward a civil aircraft dispute resolution is one of many topics between the two governments. But the outcome will provide an early test of the Biden administration’s ability to find a trade policy solution that reopens markets and meets its self-stated priority for a “worker-centric trade policy.”

Wheat Trade Needs More Certainty

Industries like those engaged in the wheat trade on both sides of the dispute need predictability. A four-month delay may provide a boost of urgency to negotiators. Still, such short-term delays are challenging for flour mills and wheat exporters alike, leaving both with only uncertainty.

For example, if tariffs return, will shipments in transit be exempt? What about supplies contracted but not yet “on the water?” If a mill agrees to supply a specific flour customer, will they be able to purchase the wheat to meet those flour specifications?

If it becomes clear that no long-term resolution is possible ahead of the July 11 end of the tariff pause, negotiators would be widely praised by industry for quickly announcing an extension of the duty suspension.

Whether or not a permanent aircraft dispute resolution will be found is hard to predict. U.S. hard red spring wheat farmers will be watching the outcome closely, as will their valued European customers, anxious for the return of days when weather and prices were easier to predict than government barriers to trade.

By USW Vice President of Policy Dalton Henry

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A coalition of Pacific Northwest (PNW) agricultural and commercial organizations recently responded with serious concerns to a controversial dam breaching proposal that would tear out four dams on the Snake River.

The dam breaching proposal, presented by U.S. Representative Mike Simpson of Idaho, aims to restore fish populations on the river while compensating groups affected by removing the dams. However, in a letter to government officials, the coalition said the plan would decimate U.S. producers’ ability to move wheat and other products to overseas customers and be of questionable environmental benefit.

The National Association of Wheat Growers joined state wheat organizations in Idaho, Washington, Oregon and Montana in signing the letter.

No Dams, No Barges

U.S. Wheat Associates (USW) has shared stories about the sustainability and reliability of wheat transportation by barge. The Columbia and Snake Rivers are essential parts of a logistical system that moves more than half of all U.S. wheat exports every year to more than 20 Pacific Rim countries. Wheat loaded on the Snake River makes up 10% of all U.S. wheat exports.

Barge traffic on the Columbia-Snake River System is the most cost-efficient and sustainable connection between U.S. wheat farmers and their customers overseas. And more easily navigable, safe and efficient barge transportation depends on river locks at each of the targeted dams.

Uncertain Results

USW shares the opinion stated in the coalition letter that improving fish populations are important and admirable goals. Still, there is little certainty removing the dams will restore fish populations to a level that would satisfy environmental advocacy groups involved in litigation over the river’s management.

The river system’s current management strikes a balance between all river uses—providing renewable electricity, transportation, irrigation flood control, and recreation. The dam breaching proposal would eliminate nearly all these benefits of the river. It would also subject interior PNW communities to a wide range of environmental and economic impacts.

Barge Traffic Safe for Now

Fortunately, U.S. wheat importers should not worry that the dams are in imminent danger. Members of Congress have not yet written legislation on the dam breaching proposal and it has not attracted much political support.

Hopefully, the proactive and vocal nature of river stakeholders early in this process will highlight the shortcomings of the proposal’s fish recovery portion and the enormous costs for trade, the region and the U.S. Treasury.

By Dalton Henry, USW Vice President of Policy

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Last week U.S. wheat farmers and their customers across the Atlantic welcomed news of a temporary truce in the drawn-out tariff war resulting from unrelated aircraft dispute cases. This week’s published announcements officially suspended 25% retaliatory tariffs on U.S. hard red spring (HRS) imports by the United Kingdom (UK) and European Union (EU) for four months, reopening trade temporarily.

The reprieve comes just as the U.S. Senate confirmed President Biden’s nominee for chief trade negotiator, Katherine Tai. When Ambassador-designate Tai takes office, among her first challenges will be finding a long-term resolution to one of the largest disputes ever mediated by the World Trade Organization (WTO).

Back and Forth

The aircraft dispute refers to a pair of WTO dispute cases filed in 2004. First, the United States challenged EU subsidies for Airbus, and the EU followed suit with a challenge against certain states’ support for Boeing. Both won their respective cases. After years of back and forth, the United States and EU also received authorization to apply retaliatory tariffs (the WTO’s means of enforcement in disputes) in 2020.

While the reprieve is welcome news to U.S. farmers and their customers, many are still cautious. With parties on both sides of the issue dug in, the four-month window for the tariff suspension is likely not long enough to solve the dispute. Ambassador-designate Tai received many questions on the subject as part of her confirmation hearing. Senators representing wheat states voiced concerns about retaliation, while senators representing manufacturing states want to keep the pressure on the EU to repeal its Airbus subsidies.

Post-Brexit Complications

The UK’s recent departure from the EU further complicates the dispute’s outcome. U.S. retaliatory tariffs have the UK in the crosshairs as a major Airbus supporting country. These tariffs have hit UK products such as scotch whiskey particularly hard. The UK has made it clear it wants to resolve the dispute, offering last December to unilaterally drop its retaliatory tariffs on U.S. products as an act of goodwill. However, the United States and EU insist the UK lost its right to retaliate upon its bloc departure. Should a long-term resolution prove unattainable, it seems likely the WTO will have to resolve the question of UK retaliation.

Unfortunately, the aircraft dispute is far from the only irritant between the United States and the EU. Since early in the Trump Administration, the United States has maintained tariffs on EU steel and aluminum exports based on national security. Several EU countries have pressed ahead with digital service taxes that largely target U.S. tech companies. These countries also rolled out environmental policy goals that may eventually seek to limit U.S. farmers’ access to technologies like gene editing and access to plant protection products.

For now, however, the four-month window is welcome news for U.S. wheat farmers and their HRS customers in the UK and EU. We applaud the negotiators for this initial step and stand by, ready to support them as they work toward a resolution. We hope for timely, sufficient progress to allow subsequent extensions until a permanent resolution is found.

By Dalton Henry, USW Vice President of Policy

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By Dalton Henry, USW Vice President of Policy

Just over a year ago, on Jan. 15, 2020, the U.S.-China “Phase One” agreement was signed, leading to the eventual waiver of China’s retaliatory tariffs against U.S. agricultural products. Those actions opened the door again to the largest wheat consumer in the world after nearly two years in which U.S. wheat producers were all but shut out.

While the final results of the Phase One agreement will not be written for several months, early returns show the agreement paid off in a big way for U.S. wheat producers and their Chinese customers.

The Phase One agreement contained both specific purchase targets for agricultural commodities, and structural changes to China’s import systems. To date, much of the celebration and criticism has centered on the purchase targets — with very little attention paid to the structural changes that in some instances resolved disputes decades in the making.

One dispute of relevance to wheat had been at the center of a WTO case dating back to 2015 on China’s administration of their grain tariff rate quotas (TRQ). In a case the U.S. won in mid-2019, the WTO panel found that China had not administered the quota in such as way as to be “transparent, fair or predictable.” With the WTO case entering compliance at roughly the same time as Phase One agreement was being negotiated, U.S. negotiators included additional language in the agreement to build on the WTO case win and ensure eventual Chinese compliance. That language included stipulations making clear that Chinese “State Trading Enterprises” are subject to the same rules as private companies and specific transparency requirements to make it possible to evaluate Chinese compliance with the allocation and reallocation provisions that are so important to the proper functioning of their TRQ.

With those new rules in place, China is projected to import 9 million metric tons (MMT) of wheat this marketing year — a 25-year high, and almost double their previously highest TRQ purchases. China turned to U.S. wheat producers for a significant portion of that higher import volume. Since the signing of the Phase One agreement, U.S. wheat sales to China have totaled more than 2.8 MMT — nearly 90% above USW’s long-term pre-trade war average. Those imports have come from four different classes of U.S. wheat and helped meet the demand for U.S. wheat from China’s private flour millers. This import volume is likely to make China the fourth largest export market for U.S. producers in marketing year 2020/21, which ends May 31.

Chinese wheat buyers and flour milling managers visited the Wheat Marketing Center in Portland, Ore., in May 2019.

Chinese wheat buyers and flour milling managers visited the Wheat Marketing Center in Portland, Ore., in May 2019 during a Contracting for Wheat Value seminar sponsored by USW. USW/Beijing Country Director Shirley Lu (second from right) translates as Wheat Marketing Center Technical Director Dr. Jayne Bock (third from left) and a colleague demonstrated falling number analysis.

There are likely to be substantial trade negotiations between China and the United States in the coming months — something wheat producers should welcome. The Phase One agreement was never supposed to be an “end-all agreement” — in fact, when it was announced, plans were already in place to start on “Phase Two,” which were eventually scrapped after COVID-19 turned the world on its head.

With a new U.S. administration taking office this week, many in agriculture are watching closely to see which way the political winds will blow those discussions with China. While there may be a desire by some for a “fresh start” in the China relationship, the Biden administration would do well for U.S. agriculture to pick up where Phase One left off and continue to build on the tremendous export potential for China. President-elect Biden’s early statements and plans to keep tariffs in place on Chinese goods until they can be reviewed are an important first step in the right direction.

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By Dalton Henry, USW Vice President of Policy

The dispute between the Chinese and U.S. government over wheat production subsidies continues. Late last month, the U.S. government officially challenged China’s purported compliance with the World Trade Organization (WTO) dispute decision that found China spent billions more on agricultural subsidies than their WTO membership allowed. That case was filed in 2016 by the Office of the United States Trade Representative (USTR) to bring the Chinese programs – and their effects on U.S. wheat producers – under control.

The subsidy programs at the heart of the WTO dispute are China’s Minimum Procurement Prices (MPP) guarantee to Chinese producers. This program would be most similar in U.S. farm policy to our Marketing Loan program. But unlike the U.S. version, the MPP is set well above world wheat prices and, as such, creates an artificial incentive for farmers produce more wheat at the expense of a more diverse range of crops. Last year’s MPP for wheat in China was $8.60/bushel; compare that to the U.S. Marketing Loan program at $3.38/bushel and to current U.S. FOB HRW prices at $5.69/bushel.

It is no wonder then why Chinese producers have dramatically increased wheat production, up 25 percent from before the policy was put in place. Even more distorting to the global market, much of that production is building stocks rather than being made available at affordable prices to China’s flour millers. Those stocks are projected to end this year at an astounding 162.5 million metric tons (MMT), comprising 52 percent of the entire world’s wheat ending stocks. That volume represents more than an entire year’s consumption in China.

 

USDA currently predicts that China will hold more than 162 MMT of world wheat stocks at the end of marketing year 2020/21.

 

The WTO dispute panel recognized this issue in ruling that China had far exceeded its WTO limits on wheat and rice subsidies. In the process of a WTO case, once a ruling has been issued the involved countries agree to a “reasonable period of time” for the policies to be changed and for the offending country to come into compliance. The reasonable period for this case ended last month with China claiming (and the United States disagreeing) that they were in compliance.

A closer look at China’s claims of compliance reveals changes designed only to work on paper. China notified changes to their policy for the coming year that attempt to cap the amount of wheat that the Chinese government will purchase at the MPP. In theory, a laudable effort, but in practice one with little impact, as the cap is set to be at 37 MMT, 40 percent more than their five-year average annual purchases.

As a result, the cap allows China to adjust the math behind calculating their compliance, without actually changing anything about the operation of the program or the unfortunate creation of burdensome stocks. That’s because with a cap set so far above previous purchase amounts, a farmer can approach a flour miller and demand to be paid the MPP. If the miller refuses, the farmer knows the government will purchase the wheat at the inflated MPP. That dynamic allows the distorting effects of the MPP to reach far beyond the actual bushels that the Chinese government purchases.

Market-based reform will have the potential to improve the situation dramatically for Chinese millers, as wheat would be grown and traded according to quality attributes and actual value, rather than that set by government regs. It would also pave the way to reducing the current wheat storage burden – one similar to the situation faced by China’s corn industry just a few years ago. In that instance, program reforms worked and brought stocks to reasonable levels, providing domestic users with more choice and storage capacity.

China’s wheat subsidies and the excess stocks that they produce have been well-documented by U.S. Wheat Associates (USW) and other groups over time, as has the revenue losses they create for U.S. farmers and indeed other farmers around the world.

USW welcomes the continued work on this case by the USTR and hopes to see an end to distortive policies like this that impede our ability to meet global demand for a diverse supply of high-quality wheat.

 

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By Dalton Henry, USW Vice President of Policy

For the better part of a century the United States has been known as the breadbasket of the world. Today, that reputation continues ringing as true as ever at a time when it may be needed most.

Reliability and certainty go hand in hand. That is why the U.S. export grain industry and the government agencies that protect and promote U.S. agriculture snapped into action when the first COVID-19 “shelter-in-place” orders forced many workers to stay home. Individual businesses developed mitigation plans including more cleaning shifts and personal protective equipment for employees. Workarounds were found to limit staff member contact and to ensure trade could continue to flow, even when items as routine as loading paperwork were being curtailed.

It wasn’t just private businesses that took steps to keep wheat exports flowing smoothly. While other countries used bureaucratic delays on regular functions such as permits and inspections to slow down exports, the U.S. Federal Grain Inspection Service (FGIS) issued a public letter stating they would “take all necessary steps” to ensure export inspection services would continue unabated. The Animal and Plant Health Inspection Service (APHIS) issued a similar letter, promising to continue critical inspections and issuance of phytosanitary certificates. Both agencies clearly understand that maintaining U.S. agricultural exports is vital, not just to the U.S. economy, but also to meeting our commitments to our partners around the world.

Federal Grain Inspection Service

USDA wasn’t the only federal agency to recognize that U.S. farmers need to stay on the job. The Department of Homeland Security is responsible for providing federal guidance in national emergencies, especially concerning critical industries. In less than a month, they have expanded the guidance defining “essential” workers and should, therefore, stay on the job in the event of “stay-at-home” or “shelter-in-place” orders to include the entire grain supply chain. That guidance includes workers in transportation, inspections, production, input suppliers and even business providing repair services. Keeping those businesses running, keeps U.S. farms running, and helps give our overseas customers peace of mind.

U.S. wheat is still flowing through U.S. ports such as here in Portland, Oregon.

As we saw at a container facility in the Port of Houston when a worker tested positive for COVID-19, there will no doubt still be small disruptions as we work through this uncertain time. But with government and industry commitment to maintaining supply chains, wheat will continue flow to customers at home and abroad from the U.S. breadbasket.

If you have questions, please contact your local U.S. Wheat Associates (USW) representative here.

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By Dalton Henry, USW Vice President of Policy

The U.S., Mexico, Canada Agreement (USMCA) is moving steadily, if somewhat slowly, to becoming an implemented trade treaty. Mexico’s government first ratified the agreement in June 2019. At the request of the U.S. House of Representatives, the agreement was revised and signed again by all three countries in December 2019, after which Mexico’s government voted to ratify the revised agreement.  President Trump signed the U.S. implementing language for the agreement in a widely attended ceremony on January 29, 2020. And now, ratification is being considered by Canada’s parliament, a process many trade watchers expect to run through March 2020 at least.

The latest step puts us a mere hop, skip and a jump from having a new trade agreement in place with two of the U.S. agriculture’s largest customers. Most importantly to wheat industry stakeholders, the new agreement moves us past the bold threats of withdrawal from NAFTA and fully protects access to U.S. wheat on a duty-free basis for Mexican customers, modernizes sanitary and phytosanitary (SPS) provisions and removes the largest remaining barrier (eligibility for grades) for U.S. producers who want to sell wheat to Canadian elevators.

On that final point, USMCA assures that U.S. wheat sold in Canada is not automatically graded as feed. It is one of the more significant new provisions in the USMCA. President Trump specifically mentioned it in his remarks at the White House signing ceremony. Western Canadian wheat growers support it.

Under the agreement, U.S. farmers interested in taking wheat across the border will still have to verify that wheat is one of the varieties registered in Canada. But it is worth celebrating that farmers near the Canadian border will have additional local outlets for grain, potential market arbitrage opportunities and a basic fairness between growers on either side of the border. These grain grading changes will give Canada a reprieve from the threat of non-compliance with the WTO’s “national treatment” standard and forces legislative changes that the Canadian government had promised to make for the better part of a decade (but never actually put into place).

Necessary changes in domestic regulations across all three countries are still needed. Those changes will be followed by a 60-day monitoring period to verify the changes are being implemented. An exchange of letters between the three countries is the seal for the deal. Wheat growers and buyers in USMCA – the new NAFTA – are very much looking forward to that day.

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By Dalton Henry, USW Vice President of Policy

Each year, the Office of the U.S. Trade Representative (USTR) compiles and publishes the National Trade Estimates (NTE) report — a comprehensive report detailing barriers that U.S. exporters, including wheat farmers, face in markets around the world.

The first step in compiling the massive report (last year’s came in at 537 pages), is to collect feedback from the export stakeholders. U.S. Wheat Associates (USW) participates in this process each year by consulting with our offices overseas, talking to customers and researching trade barriers. That work culminated last week when USW submitted to USTR its compiled information, covering barriers in a dozen wheat importing countries.

Each year, many of the challenges highlighted in USW’s submission are issues that remain unresolved. This year, however, USW’s reports about on-going concerns with China and India were substantially changed.

The new report on barriers in China reflect the progress made since last year to bring China’s wheat import tariff rate quota (TRQ) and wheat subsidy policies into compliance with the government’s WTO commitments. This year’s report reflects the progress made in those areas as a result of the two WTO cases the United States won last spring, and China’s initial policy proposals to address those WTO rulings.

While the report shows some progress in the China section, it highlights a growing area of concern in India. India runs subsidy programs very similar to China, including minimum purchase prices and input subsidies. USW and USTR have demonstrated previously that India is well outside of its WTO limits in the level of government subsidies. Those subsidies have spurred excess production and subsequent wheat stocks that, once at a critical mass, India must subsidize to dump onto the world market. USDA projects that Indian wheat ending stocks will exceed 20 million metric tons (MMT) for 2019/20 — a level that historical data shows will likely result in India resuming wheat exports in the near future.

USW’s most recent NTE report can be found online here. It provides an overview of the key issues that USW works on every year and supplies USTR with up-to-date information on ongoing problems in wheat trade. In doing so, it fills a vital role in the enforcement of trade rules, something that U.S. farmers and their customers overseas want to see more than ever.