Presidential Politics and Trade Agenda

PHOENIX (DTN) -- The United States needs to negotiate more free trade agreements in order to diversify agricultural export markets, but that's unlikely in the near future whether President Biden wins re-election or former President Trump returns to office, Michael Dykes, president and CEO of the International Dairy Foods Association, told his members at the group's Dairy Forum here this week.

U.S. dairy exports have risen from almost zero to about 18% of U.S. production in the last 20 years, but there are many problems with dairy exports, and the range of countries to which the U.S. industry has access needs to expand, Dykes said.

USTR ON TRADE AGENDA

Agricultural trade lobbyists have said the Biden administration should ask Congress to pass Trade Promotion Authority so that Trade Representative Katherine Tai could pursue new trade agreements to reduce tariffs, but the administration has shown no interest in pursuing Trade Promotion Authority.

Doug McKalip, the Biden administration's chief agricultural negotiator, spoke at the Dairy Forum on Wednesday and said he and Tai understand the need for better access to foreign markets and are trying to ease entry for U.S. dairy exports through methods other than free trade agreements.

But McKalip also pointed out free trade agreements can take six or seven years to negotiate and said the Biden administration is focused on "changes that come into effect right away."

He noted India agreed to reduce tariffs on a range of U.S. agricultural products in 2023 and said USTR continues to negotiate with India on certain animal and plant sanitary trade barriers.

All together he said, in 2023, countries dropped a dozen tariffs on U.S. agricultural products, and more than 30 countries removed barriers to trade.

But McKalip also acknowledged that U.S. farm exports are concentrated in a few row crops and that only four or five countries make up 60% of the export market.

McKalip also said USTR is "deep in the throes" of negotiations with Mexico about its policies on biotechnology under the U.S.-Mexico-Canada Agreement on trade. He also acknowledged that the United States lost a case over Canada's dairy policies under USMCA but said the Biden administration "will not rest" until U.S. dairy farmers get the kind of market access they expected when the USMCA was signed.

McKalip said the current attempts by Houthi rebels to stop shipping in the Red Sea and Russia's blowing up grain terminals in Ukraine only prove the importance of trade in the world today. U.S. special forces have been trying to keep the shipping lanes open and several U.S. soldiers have lost their lives, he pointed out.

Too often, McKalip said, conversation about agricultural exports turns to putting money in farmers' pockets. McKalip noted he had spent time with the longshoremen who load and unload ships and appealed to the dairy executives to tell their neighbors that agricultural exports benefit a lot of other workers besides farmers.

"It is super important for us to tell the story of trade from the milkhouse to the supermarket shelf," he said. "As you defy the odds and export across the world, that means a lot of jobs."

NO TRADE AGREEMENTS ON HORIZON

After McKalip's speech, Dykes said he was "glad to see they recognize the potential and the need to diversify," but said the atmosphere for gaining more market access is bad.

"Do we have the support in this country to do a trade agenda?" Dykes asked in an interview.

In a meeting with reporters Monday, Dykes said, "I don't see a resurgence and interest in trade. We are going through a populist, protectionist time."

In his speech, Dykes said, "If we have the Biden administration to continue, (it) doesn't appear as though we will have a trade agenda. If we have the Trump administration, it looks like we're going to be back into tariffs and we see how the tariffs even stayed on during the Biden administration. Trump is talking about 10% tariffs. What happens if we have tariffs? Food and ag products get retaliated on the import side."

Trade Promotion Authority, which would give the executive branch the authority to negotiate agreements on the basis that Congress would only approve or not approve agreements rather than amend them, "is really not talked about in the Congress, which is where this has to pass," Dykes added. "We don't have a focus on trade and advancing ourselves in trade."

Dykes continued, "There probably isn't a hotter topic in Congress than China. What do we do with China? How do we de-link from China? We can't afford to de-link from China from a dairy perspective. It is our No. 3 market. We need to stay connected.

"Trade agreements take time. New Zealand's trade agreement with China was signed in 2008. Jan. 1, 2024, they have duty-free access to China. They don't happen overnight. We need to be thinking about our China policy.

"We need to be where the people are. By 2100, India will surpass China as the most populous nation in the world. We see the fastest five of the world's 10 largest countries will be in Africa. Six of the 10 fastest-growing economies will be in Africa. Today, one-third of the global population lives in Africa and India. We need to be where the people are. We need to diversify our markets."

Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com

Follow him on X, formerly known as Twitter, @hagstromreport

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