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TRADE WINS

Pair of agreements set positive note for 2020
Story by: Glen Liford 2/24/2020

 

Developments in early January set a positive tone as the U.S. and China reached a Phase One Trade Agreement that is hoped to ease tensions between the two countries. Later, the United States Sentate approved and President Trump signed into law the U.S.-Mexico-Canada Agreement (USMCA) to replace the old North American Free Trade Agreement (NAFTA).
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January 2020 kicked off the year on a hopeful track for farmers. On Wednesday, Jan. 15, President Trump and China’s President Xi signed a historic Phase One Trade Agreement that is hoped to signal the end of the ongoing trade dispute between the world’s two largest economies.

Just one day later, on Thursday, Jan. 16, the Senate passed the U.S.-Mexico-Canada Agreement (USMCA) by an uncommon bipartisan vote of 89–10. President Trump signed the agreement into law on Wednesday, Jan. 29.

Both agreements help to fulfill promises Trump made while campaigning for the nation’s highest office and reflect one of his greatest priorities as president.

While these moves have been met with skepticism in some quarters, Tennessee officials are cautiously optimistic. Dr. Andrew Muhammad, professor and Blasingame Chair of Excellence in Agricultural, Food, and Natural Resource Policy, with the University of Tennessee Institute of Agriculture’s Department of Agricultural and Resource Economics, says the Phase One agreement seems like a “pretty good first step to end the trade tensions between the U.S. and China.”

“This does not represent the actual ending of these tensions, but it feels good the two countries were able to come to the table and at least hammer out a deal,” he says.

Whether or not the agreement is a “win” will depend on its implementation. China has essentially committed to a 100-percent increase in U.S. ag exports, he explains. For perspective, U.S. agriculture exports in 2017 (before the trade dispute) in the categories referenced by the agreement were about $19 billion. China has committed to $40 billion in exports for those same categories for the next two years.

 “If China is able to pull this off, there will clearly be significant income for the U.S. agriculture sector in areas where China is a significant buyer,” says Muhammad, noting that corn, soybeans, and some grain products are areas to watch.

Experts, he says, are concerned whether such increases are feasible. There are also no guarantees about which categories of products will see increases. Involved agencies like the U.S. Trade Representative Office and the U.S. Department of Agriculture are not disclosing specifics at this time to avoid unintended market implications.

As for the USMCA, Muhammad says the agreement is a good one as it relates to agriculture and dairy farmers in particular, he says. The agreement expands the number of dairy products that can be exported by the U.S. to Canada at lower tariffs. Poultry is also an area that will see greater opportunity.

Tennessee Department of Agriculture officials were quick to praise the agreements as positive developments for Tennessee farmers. The ratification of the U.S.-Mexico-Canada Agreement (USMCA) earned particular praise.

“I’m encouraged by today’s bipartisan passage of the (USMCA),” stated Commissioner Charlie Hatcher, D.V.M on the department’s Facebook page on the day of the approval. “This trade deal strengthens the deep agricultural ties we have with our neighbors. Producers of soybeans, corn, beef, poultry, wine, wood products, spirits, and everything in between from this deal.”

Keith Harrison, assistant commissioner of agriculture for business development, echoes Hatcher’s sentiment.

“These agreements are roadmaps to minimize tariffs and should create a more favorable situation for our Tennessee farmers,” says Harrison. “Any agreement that strengthens relationships with our trading partners is positive. Canada is Tennessee’s No. 1 international trading partner in terms of exports, and Mexico is No. 5. It’s uncertain how soon business will return to normal levels as these relationships are re-established, but we hope to see them continue to improve.”

Dr. Muhammad agrees.

“There is some question whether the U.S. and China will ever get to a Phase Two agreement,” he says. “Will we ever see China decrease tariffs they have imposed on U.S. agriculture products? Can we ever get back to the status quo? Will U.S. agriculture exports fully recover as a result of this Phase One trade deal? Only time will tell.”

Mid-South Agricultural Trade Conference on March 5 is among trade events planned for 2020

Tennessee Department of Agriculture is continuously and diligently working to identify business development opportunities for Tennessee farmers both domestically and internationally, says Keith Harrison, assistant commissioner of agriculture for business development.

On March 5, TDA, along with the University of Tennessee-Martin, University of Tennessee Institute of Agriculture, and the UT Extension Center for Profitable Ag will host the Mid-South Agricultural Trade Conference to be held in Martin at the UTM Bowling University Center. The conference will feature experts on trade, policy makers from Washington, D.C., and a panel of state and national commodity leaders who will answer questions about agricultural trade.

The conference is the latest in efforts to cultivate relationships that may prove beneficial for Tennessee farmers, says Harrison.

“TDA has an aggressive business development focus, and is continuously working to recruit and encourage interested trade partners,” he says. “We’re happy to discuss export opportunities with any farmer, agribusiness, commodity group, or further processor of our agricultural/forestry products.”

Other international trade events on the TDA calendar include:

• Native Spirits Whiskey Tour, statewide, March 24-27; focus: whiskey

• American Food Fair @ the National Restaurant Show, Chicago, Ill., May 16-19; focus: food and beverage

• Summer Fancy Food Show, New York, N.Y., June 28-30; focus: food and beverage

• SUSTA In-state 50% Cost Share Training, Chattanooga, July 16; focus: food and beverage, horticulture, and pet food

• Equitana, Lexington, Ky., September 25-27; focus: equine

• Vietnam Wood Products Inbound Trade Mission, statewide, October 2020; focus: wood products

• USDA United Arab Emirates Trade Mission, Dubai, UAE, Nov. 15-18; focus: wood products and pet food

For more information, visit the TDA website at www.tn.gov/agriculture or contact Whitney Flatt, TDA International Trade Consultant at 615-837-5334 or whitney.flatt@tn.gov.

 
 
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