Talking Ag Trade at Classic

Efforts to Increase US Bilateral Deals Depends on Getting Trade Team in Place

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Tom Sleight, president and CEO of the U.S. Grains Council, updated people attending Commodity Classic about the group's recent work to boost exports. (DTN photo by Chris Clayton)

SAN ANTONIO, Texas (DTN) -- Tom Sleight, president and CEO of the U.S. Grains Council, remains hopeful for opportunities to tweak the North American Free Trade Agreement and expand markets for U.S. grain products once the Trump administration gets its full trade team in place.

While touting an aggressive trade agenda, the White House is still waiting for U.S. Trade Representative nominee Robert Lighthizer to be confirmed. Sonny Perdue, the nominee for Agriculture secretary, is still waiting on a date for a confirmation hearing.

"Everything is on hold right now at USDA and USTR," Sleight told DTN on the Commodity Classic tradeshow floor. "They really can't do or say anything until they get a boss in place. So we spend a lot of times talking, but nothing really happens."

The Trump team wants to see more bilateral deals for the U.S. Currently, out of more than 250 bilateral trade deals globally, the U.S. has only 17 such free-trade agreements. "The U.S. is facing higher tariffs than some of these other countries in these markets," said Jason Hafemeister, associate administrator of the Foreign Agricultural Service, when he spoke Friday to members of the American Soybean Association.

Hafemeister said Japan would be top of mind for U.S. trade negotiators trying to reach a bilateral deal. That would mainly be due to high tariffs on U.S. beef and a convoluted system for calculating pork tariffs.

Sleight concurred with Hafemeister's analysis that Japan would be a critical agricultural market for a bilateral deal. This would mainly help to lower tariffs and other barriers for meat products such as beef.

"When we think bilateral, if we're going to do it, let's get after it now because time is not on the U.S.' side," he said.

Along with opening up trade talks, leaders from corn, soybean and wheat groups at the Commodity Classic event last week championed doubling the funding for a pair of USDA trade-promotion programs -- the Market Access Program and the Foreign Market Development Program. Sleight said the two programs go together to help groups such as the Grains Council.

"We're a big recipient of both MAP and FMD money," Sleight said. "That is how we leverage producer checkoff money is with MAP and FMD."

The Foreign Market Development Program is used for fixed costs such as offices and staff around the world. The MAP funding largely goes for specific projects to promote agricultural products such as trade show functions.

In terms of grain, Sleight said there are some issues for the U.S. in Vietnam, which is the world's fastest-growing feed market right now. Bigger issues in other countries involves phytosanitary problems such as biotechnology approvals.

Sleight added that the U.S. Grains Council would like to see the tariff-rate quota for corn expanded in Colombia. Right now, the quota for lower rates typically is filled within five months of the year, so importers have to pay higher rates for most of the year to bring in U.S. corn.

Regarding Mexico, Sleight noted a trade relationship built up over decades is suddenly getting frosty. Mexico is the top market for U.S. corn and wheat, and the second-biggest market for soybeans. Its leaders, however, are now looking to see if Argentina and Brazil could export more product to Mexico in response to President Donald Trump's push for a wall and more deportations.

"There is definitely a buy-south mentality right now in Mexico," Sleight said. "They are looking south for their food, and for them it is a matter of food security. They think they cannot be dependent on the U.S. for their food supply because we might do something strange."

On the positive side of the ledger, Sleight added that ethanol has become a bigger export product for the U.S. since 2014. The four key markets there are China, Mexico, Japan and India. Then there are some increasing secondary markets such as the Philippines, Peru and Columbia as well.

Sleight said ethanol has a different attraction in each market. In Japan, it is greenhouse-gas emissions. In Mexico, the attraction is the price. China and India like U.S. ethanol as a way to offset some serious air-pollution problems.

"It is sort of complementing their own domestic alcohol industries and having U.S. ethanol fill the gap," he said.

Sleight said he checks phone apps every morning to see the air quality indexes in China and India. "So in India and China it is a pollution play, but in other places it is an octane play" to sell ethanol, Sleight said. "Each country is a slightly different focus."

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Chris Clayton