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U.S. Wheat Associates (USW) is very pleased that several members of Congress have asked Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Katherine Tai to pursue a World Trade Organization (WTO) case against India’s trade-distorting domestic wheat and rice support.

In separate letters to those officials, members of the U.S. Senate and House of Representatives noted that while India is limited to providing 10% support for crop inputs under its WTO agreement, the government subsidizes half the total cost of wheat and rice production and recently announced a massive new subsidy for fertilizer. The letter also reminds Ambassador Tai and Secretary Vilsack that the United States counter-notified India’s claim that it meets WTO limits on price support. However, India’s government continued raising the guaranteed prices it pays to purchase wheat and rice.

India’s subsidies lead directly to domestic supplies that far exceed India’s acknowledged need for stockkeeping – stocks the government cannot store effectively. As a result, the government unloads stocks into the export market, often at prices below what it paid to purchase the wheat. USDA estimates Indian wheat exports for the marketing year ending June 30, 2022, will be 5 million metric tons (MMT). This leaves almost 28 MMT of wheat stocks remaining.

Chart shows Indian wheat production and exports to illustrate trade distorting wheat and rice subsidies

India’s wheat subsidies encourage over-production, pushing India into the global export market. As a result, stocks exceeding the government’s ability to store wheat periodically distorts trade. Source: USDA Foreign Agricultural Service Production, Supply and Distribution Databases.

The distortion of international wheat and rice trade from these policies is severe, costing U.S. wheat farmers more than $500 million per year in lost income according to a 2020 Texas A&M University study commissioned by USW and USA Rice.

Wrong Subsidies, Wrong Time

Subsidies encouraging over-use of agricultural production inputs are not appropriate when the world is concerned about agriculture’s environmental footprint. We ask the question why is India subsidizing fossil fuel and chemical fertilizer use? Why is India subsidizing over-production that encourages the cultivation of more marginal land?

U.S. wheat and rice farmers rely on open markets and fair trade to sustain their ability to feed the world. USW joins members of Congress and the National Association of Wheat Growers in calling on India to adhere to its international commitments and willingness to work with USDA and the Office of the U.S. Trade Representative to maintain the competitiveness of U.S. wheat in the world.

Graph shows various wheat subsidies reported to WTO.

The U.S. government submits this data to the WTO by the U.S. government as part of a counter-notification. This data shows a wide discrepancy between actual domestic wheat support and the Indian government’s submission.

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Though disappointed in the postponement of the 12th World Trade Organization (WTO) Ministerial Conference this week, U.S. Wheat Associates (USW) will continue working with U.S. agricultural interests toward positive reform of this important organization.

As a member of a U.S. agricultural coalition that is speaking up on the importance of the WTO, USW representatives were set to attend the WTO ministerial “MC12” in Geneva, Switzerland. Ms. Sharon Bomer Lauritsen, the founder of Ag Trade Strategies, LLC, and a former Assistant U.S. Trade Representative for Agricultural Affairs and Commodity Policy, supports the coalition and recently outlined key positions on the WTO in a co-authored Agri-Pulse editorial.

“The WTO is a crucial element in facilitating global trade, but it is in need of reform,” she and her co-author wrote on Nov. 24, 2021. “To revitalize and restore confidence in the WTO, attention must be paid to addressing government policies that distort production and trade, including tariffs and trade distorting domestic support.”

In remarks made to business interests just before the WTO ministerial was postponed, however, WTO Director-General Ngozi Okonjo-Iweala had little optimism for substantial progress on agricultural domestic support negotiations.

There is a stand-off over price supports used for public stocks between some developing countries like India and China and a group of developed and developing countries, especially the United States and several Latin American countries. India, for example, fiercely protects its trade distorting subsidies for wheat and rice as part of its public stockholding program for food security. Unfortunately for the rest of the world’s wheat and rice producers, these hefty subsidies can lead to larger stocks and the need for India to export these grains, often at lower prices than the costs the government incurred for the grain.

The U.S. coalition is also concerned that WTO members are not complying with their transparency requirements for reporting on domestic agricultural subsidies. Less than half of WTO members have submitted notifications on their subsidies since 2016, and many of those are incomplete, manipulated data, or incorrectly categorize their policies.

Data from the WTO shared as part of U.S. dispute cases and counternotifications reflect this issue. The graph below shows the wide disparity between the wheat subsidy levels China and India reported and the actual levels identified by a WTO dispute panel and other members.

Graph shows various wheat subsidies reported to WTO.

Source: World Trade Organization.

Improving transparency requirements for policies impacting agriculture trade and notifications of current commitments was a realistic outcome from the MC12 meeting that USW and the U.S. coalition will continue to encourage.

USW strongly supports the WTO’s mission to liberalize world trade. In a July 2021 letter, USW and the National Association of Wheat Growers joined dozens of other agricultural organizations in sharing key priorities for the WTO to U.S. Trade Representative Katherine Tai and U.S. Secretary of Agriculture Tom Vilsack.

“The WTO has served American farmers, ranchers, and workers across the food and agriculture sector well, but in recent years the flaws in the system have become apparent,” the letter stated. “Reform is … needed, including changes that lead to a market opening agenda for agriculture and a better functioning institution. These changes can help improve global agricultural sustainability and support rural communities, workers, and better-paying jobs.”

USW believes a “better functioning” WTO will also benefit our wheat importing customers around the world.

 

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By Ben Conner, Partner, DTB AgriTrade

Over the last several years, U.S. Wheat Associates (USW) and other industry groups have demonstrated how the policies of a few advanced developing countries are distorting world wheat trade and hurting farmers in the United States and other wheat exporting countries. Chinese government grain policy attracted special attention, leading to two dispute cases at the World Trade Organization (WTO), one on excessive subsidies and one on China’s administration of a tariff rate quota on wheat, corn, and rice. By April 2018, WTO dispute panels had sided with the United States in both cases.

Today, the official settlement process for one of those cases has entered the next phase. On July 26, 2021, the United States asked the WTO Dispute Settlement Body (DSB) for authorization to raise tariffs on imports from China due to its failure to comply with the DSB recommendations on its tariff-rate quota (TRQ) administration. China blocked the request, which puts the matter before an arbitration panel. Simultaneously, China made its own request for another panel to review whether it has brought its policies into compliance.

Very close observers of WTO processes might experience deja vu because this is exactly what happened with the case on China’s subsidies for the same commodities last summer.

The next step is for the WTO to form two panels to review the requests of both China and the United States. The compliance panel will look at whether China’s TRQ administration is now functioning on a “transparent, predictable, and fair basis … using clearly specified administrative procedures,” as required by the DSB recommendations. An arbitration panel will review the U.S. request to raise tariffs and decide whether its methodology is appropriate.

Two Reasons for the Challenge

Why is the U.S. government taking this step forward on this case? After all, China has been importing record amounts of wheat and corn since the signing of the Phase One deal (rice is notably lagging) that included implementation of the WTO recommendations on TRQs and subsidies. There are two main reasons.

Procedurally, the U.S. government had to continue extending the window for China to comply (they had already agreed to seven extensions), allow that window to expire with no further action and forfeit its right to suspend concessions, or request that right within 20 days after the window expired. It chose the third option.

Even though China has allowed higher imports, there is still little clarity on how TRQ shares are allocated and reallocated.

If the process remains opaque and unpredictable, China will not be in compliance with its TRQ obligations, which could prevent imported wheat with qualities supplementing Chinese domestic wheat from reaching the Chinese wheat millers who could use it most effectively. It is encouraging that the U.S. and Chinese governments are continuing this case as it will help resolve disagreements over whether China is in compliance with its TRQ commitments and exert pressure to fix problems with Chinese government grain policy permanently.

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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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Trade Promotion Authority (TPA) is a key trade negotiation tool. TPA is due to expire in the U.S. in a month, posing serious challenges for ongoing negotiations important to wheat growers.

TPA is commonly called “fast track authority” because of its provisions to speed Congressional approval of trade agreements that were negotiated and agreed to by the administration of a sitting U.S. President. It has been granted to every presidential administration since Franklin D. Roosevelt and is, in effect, a tool to instill confidence in U.S. trading partners. It is crucial to advancing negotiations because under TPA, other countries would be less hesitant to make commitments in a negotiation fearing that a final agreement could be amended by the U.S. Congress.

While there is still time for Congress to extend TPA before the current expiration on July 1, 2021, there has been little discussion of renewal and the Biden Administration has not yet asked Congress to extend the authority. In reality, TPA has already expired because any newly negotiated free trade agreements (FTA) have a 90-day notification requirement. So even if a new agreement were notified today, it would eclipse the existing TPA authority by two months.

Before the current administration took office, the United States was negotiating free trade agreements with Kenya and the United Kingdom (UK) under Trade Promotion Authority. Agreements with both countries present opportunities to expand U.S. wheat exports.

UK Trade

Buyers in the UK import mainly hard red spring (HRS) wheat from the U.S., due to prohibitive tariffs on medium and low-protein wheat and large domestic production of soft wheat. The U.S. supplies around 20% of the UK’s wheat imports. An FTA between the U.S. and the UK could give buyers greater access to additional U.S. wheat classes. After the UK officially left the European Union customs union at the start of 2021, it is now able to negotiate its own trade agreements. Due to the strong relationship and opportunity to increase wheat options for UK millers, an FTA between these two large economies should be a major priority.

Kenya Trade

Following the resolution last year of a sanitary/phytosanitary trade issue, there is more opportunity for U.S. wheat to enter the Kenyan market. Allowing favorable trade terms for U.S. wheat into this African country would make U.S. wheat more competitive with European and Black Sea wheat. An FTA with Kenya could serve as a model for future agreements with other African countries, which is important, as the continent is growing both in population and in food demands.

TPA Benefits

Almost all U.S. free trade agreements have been concluded with TPA in place. For example, the previous renewal of TPA enabled the renegotiation of the North American Free Trade Agreement (NAFTA), now known as the U.S.- Mexico- Canada Agreement (USMCA) and the U.S.- Japan Trade Agreement. Both agreements benefited wheat producers and their offshore customers significantly.

There has also been chatter among pro-trade folks in Washington about the potential of the United States rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP). Joining CPTTP would allow U.S. wheat level access to Vietnam in the Asian region and to any other country added to the bloc. Securing TPA would greatly encourage the idea of joining CPTTP and provide an effective consultation process with Congress and, eventually, a streamlined vote.

USW Supports TPA

More than 50% of U.S. wheat production is exported every year so creating new market access, secured through free trade agreements, is critical to U.S. wheat competitiveness. USW highlighted the importance of TPA in comments to the United States International Trade Commission (USITC) in 2020 and continues to support its renewal.

By Shelbi Knisley, Director of Trade Policy

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By Shelbi Knisley, Director of Trade Policy

The Office of the U.S. Trade Representative (USTR) released its annual National Trade Estimates (NTE) report March 31, 2021, which highlights U.S. trade barriers across various industries including U.S. wheat. The 2021 NTE features reports on more than 60 counties.

U.S. Wheat Associates (USW) submitted comments in late 2020 to USTR to be considered for the NTE. Although not all the trade issues USW raised made it into the final report, USTR does highlight several ongoing issues as well as some resolved long-standing issues for U.S. wheat.

Brazil

In the NTE report, USTR noted that the Brazilian government opened its 750,000 metric ton tariff rate quota (TRQ) for wheat imports outside of MERCOSUR. The TRQ was opened in 2019 and then increased in 2020. Having the TRQ open outside of MERCOSUR countries is welcoming news for U.S. wheat producers, as it helps U.S. wheat to compete based on quality and value in the Brazilian market.

China

The U.S. government continues to monitor China’s compliance on its TRQ allocation. After losing a World Trade Organization (WTO) dispute case brought by the United States, China agreed to follow its commitment on a TRQ allocation of 9.64 million metric tons (MMT) of wheat. Before the WTO case and the U.S.- China Phase 1 agreement, China had never filled its TRQ for wheat despite conducive market conditions. Over the last year, China has made significant wheat purchases and USDA Foreign Agricultural Service estimates China’s wheat imports at 10.5 MMT for marketing year 2020/21. The NTE also highlights China’s inability to comply with its domestic support obligations on wheat, rice, and corn production following a WTO dispute brought by the United States in 2016.

India

The NTE highlights a major trade policy issue with the Indian government maintaining market distorting domestic support policies. Those policies encourage Indian farmers to produce excess amounts of wheat, distorting markets through large domestic crops and suppressing global prices. When domestic stocks get too large, India has exported the excess supplies in the market at low prices. A study by Texas A&M University economists estimates that U.S. wheat production value would increase by $516 million per year by 2028/29 if India eliminated these subsidy policies.

Kenya

The NTE also included information about a 2020 win for U.S. wheat farmers that helped resolve a sanitary-phytosanitary (SPS) barrier related to the plant disease Flag Smut and Pacific Northwest wheat exports to Kenya. This is an issue that USW has been working to resolve for many years. Please read more about it here.

USW is encouraged to see USTR highlight the important trade barriers, as well as the successful resolution of several trade barriers for U.S. wheat exporters. The full 2021 National Trade Estimates report from USTR can be found here.

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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 Shelbi Knisley, USW Director of Trade Policy

Last week, U.S. Wheat Associates (USW) submitted comments to the United States International Trade Commission (USITC) on the importance of Trade Promotion Authority (TPA) legislation to U.S. wheat producers.

The Office of the U.S. Trade Representative (USTR) describes TPA this way: “Since 1974, Congress has enacted TPA legislation that defines U.S. negotiating objectives and priorities for trade agreements and establishes consultation and notification requirements for the President to follow throughout the negotiation process. At the end of the negotiation and consultation process, Congress gives the agreement an up or down vote, without amendment. TPA reaffirms Congress’s overall constitutional role in the development and oversight of U.S. trade policy.”

TPA is important in securing free trade agreements (FTAs) by establishing a known, reliable process for securing congressional approval of agreements negotiated by the executive branch. TPA has been vital for the growth of U.S. agriculture and future trade agreements, by maintaining competitiveness for U.S. wheat producers in the global market.

U.S. wheat producers have benefitted from several FTAs over the last several decades that were negotiated and approved through the TPA process. For example, the North American Free Trade Agreement (NAFTA) was critical in developing the market for U.S. wheat in Mexico, which is now our number one export destination. USW also supported the updates to NAFTA, found in the U.S.-Mexico-Canada Agreement (USMCA), which will address additional trade issues including an improved sanitary and phytosanitary (SPS) chapter. This is a first-of-its-kind provision for regulating trade in goods developed using agricultural biotechnology and updated methods for resolving technical disputes. These provisions should help avoid future challenges that have the potential to disrupt U.S. wheat exports.

The U.S.-Peru Trade Promotion Agreement FTA is a virtual guarantee that tariffs will remain at zero for U.S. wheat. It entered into force in 2009, the same year as the Peru-Canada agreement. Both allowed immediate duty-free access to Peru’s wheat market. Peru’s overall wheat imports have grown from 1.4 million metric tons (MMT) before the agreement to 2.2 MMT in 2019/20. The U.S. market share is around 20 percent. Argentina and Russia also compete in Peru, which now applies zero duties for all wheat imports.

Grain trade is a high volume, low-margin business. Even relatively small tariff differences can have a detrimental impact on both suppliers and importing industries. Wheat trade can be highly affected by quality, and U.S. wheat tends to be among the highest quality globally. However, quality is not free, and an importer may decide that the value advantage of U.S. wheat is not worth the additional cost of the duty if an alternative origin receives improved market access. Predictable market access and a level playing field are therefore top priorities for USW.

Trade Promotion Authority is a key tool for securing new FTAs. While trade agreements negotiated under TPA do not guarantee success in a market, they have a strong track record of playing an important role in expanding and maintaining access for U.S. wheat producers.

For more details and to read about other FTA’s impacts on U.S. wheat exports, USW comments to USITC can be found here.

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By Shelbi Knisley, USW Director of Trade Policy

Last week U.S. Wheat Associates (USW) submitted comments to the Office of the United States Trade Representative (USTR) for the annual National Trade Estimates (NTE) report.

The NTE report allows U.S. industry organizations to highlight and comment on trade barriers impacting their trade opportunities to the U.S. government. USW highlighted several key U.S. wheat markets where there are many barriers in market access, sanitary and phytosanitary (SPS) issues, export subsidies and domestic support. Two of these barriers are highlighted below.

India

India maintains a trade distorting market price support system that encourages domestic wheat production. This leads to distortion in the international market due to domestic crop size and price. When stocks are too large, India has a history of applying export subsidies to move these excess wheat supplies out of the country. If they were to comply with World Trade Organization (WTO) rules and eliminate these subsidies it would create a more level playing field for U.S. wheat exports and increase U.S. wheat annual value of production by an estimated $516 million per year by 2028/29, according to a study by a Texas A&M University economist.

China

China has long been featured in USW NTE submissions with its violations of domestic support and TRQ policies. This year, both of those sections received substantial updates as China works toward compliance in the WTO case rulings and in implementing the Phase One agreement. When China joined the WTO, it agreed to an annual 9.64 million metric ton (MMT) tariff rate quota (TRQ) with a one percent duty but have always manipulated its administration to prevent proper use. USW is encouraged by the recent changes that have promoted extensive use of the TRQ this year but remains vigilant in monitoring the TRQ administration to ensure full compliance with the WTO ruling. That TRQ administration, coupled with real domestic support reforms, are key to unlocking the long-term potential of China’s wheat market for U.S. farmers and to providing consistent access to U.S. supplies for Chinese millers.

For more details and to read about trade barriers in other countries, USW comments to the USTR can be found here. USTR will use these comments to develop its annual NTE report to be released in early 2021.