Ag Policy Blog

Trump, Russia and the Challenge of U.S. Ag Trade

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A quietly downplayed or ignored element in that now-infamous intelligence dossier is the impact Russia's election interference has had influencing trade policy.

The dossier, now known to be put together by a former British intelligence officer, states one successful goal in the election was to shift both presidential candidates to oppose the Trans Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership. On both counts, the dossier states that the Kremlin was pleased with the results.

The report stated that part of the Kremlin's objective in the election was "to shift policy consensus favorably to Russia in U.S. post-Obama whoever wins." That involved pushing Clinton away from Obama's policies, as well as influencing Trump. The dossier stated, "The best example of this was that both candidates now openly opposed the draft trade agreements, TPP and TTIP, which were assessed by Moscow as detrimental to Russian interests."

In his press conference last week President-elect Donald Trump called the dossier "fake news" and denounced the reporting on it as a political witch hunt.

Trump campaigned aggressively against TPP. He said in a video right before Thanksgiving that one of his first actions when he takes office on Friday will be to issue a notification of the U.S. intent to withdraw from the Trans-Pacific Partnership, which Trump called "a potential disaster for our country."

TPP is a 12-country trade deal in the Pacific Rim that the President Barack Obama's administration has touted would eliminate tariffs on more than 18,000 U.S. products. Canada, Mexico, Australia and Japan are all part of the trade pact, along with Vietnam, Singapore, Brunei, New Zealand, Chile and Peru. Most commodity and agricultural groups aggressively supported the trade pact. Still, Trump made ending the TPP a major part of his populist campaign.

Regarding TTIP, the trade deal with the European Union has been on thin ice for various reasons in both the U.S. and Europe. Agricultural biotechnology, as well as protectionist issues regarding geographical labels for food, were just a few of the issues bogging down the agricultural elements of TTIP.

Still, Trump poked the EU further over the weekend. He was quoted in the "Times of London" calling the British exit of the EU, "a great thing" and arguing that more countries would leave the EU to seek their own identity. In that same interview, Trump said he expected to get trade deals with both United Kingdom and Russia.

On Russia, Trump said he would end trade sanctions with Russia in return for a reduction in nuclear arms.

"They have sanctions on Russia. Let’s see if we can make some good deals with Russia," Trump was quoted as saying by The Times.

"For one thing, I think nuclear weapons should be way down and reduced very substantially, that’s part of it. But Russia’s hurting very badly right now because of sanctions, but I think something can happen that a lot of people are gonna benefit."

http://www.reuters.com/…

U.S. Trade with Russia

Partially because of trade sanctions, trade of all U.S. products to Russia is small. From January-November 2016, the U.S. exported $5.4 billion in total to Russia, while importing $13.3 billion in products. Before sanctions were imposed, the U.S. exported $11.1 billion to Russia in 2013 while importing $27 billion in goods.

The biggest U.S. export to Russia is civilian aircraft equipment, pegged at about $1.9 billion in 2015, according to U.S. export data.

Ag Exports to Russia

Currently, the U.S. sends few agricultural products to Russia because of sanctions and counter-sanctions. On. Aug. 6, 2014, Putin banned imports of most agricultural and food products from the U.S. and Europe. Those included beef, pork, poultry, fish, seafood, fruits, nuts, vegetables and prepared foods.

U.S. ag exports to Russia have not been significant. Exports topped $1.8 billion in 2008, and $1.6 billion in 2012. In 2013, the last full year before the ban, the exports topped $1.3 billion.

Excluded from the ban, soybean exports to Russia amounted to $189.2 million in 2015, by far the largest agricultural export, according to U.S. Census data on exports.

Poultry was the big item before ag exports were cut off, topping $310 million in 2013. Russia was the fourth-largest export market for poultry. Poultry exports to Russia had been as high as $800 million in 2008. In 2015, just $695,000 in poultry products were sent to Russia.

Pork exports had hit just under $62 million from January-June 2014 before Russia implemented its ban.

Beef exports to Russia hit $299 million in 2012, but then fell to just $1 million after restrictions on U.S. beef were put in place in 2013.

Prepared foods were about an $84 million market in 2013 before the ban.

Regarding dairy, the U.S. hasn't sent any significant dairy products to Russia since 2010.

Meanwhile, on the other side of world, the Chinese government made it clear that its "one-China principle" in dealing with Taiwan is not negotiable. In its most aggressive statements, China's Foreign Ministry told reporters that China won't bargain or trade-off on that policy. "Whoever attempts to harm the one-China principle out of any motive or uses the principle as a bargaining chip will definitely be facing broad and strong opposition from the Chinese government and people, as well as the international community," said Foreign Ministry spokeswoman Hua Chunying.

http://www.nytimes.com/…

China is the largest market for U.S. ag products. Major ag groups wrote Trump just last week asking him to ensure that existing ag trade markets be maintained as well as new markets opened. The letter noted, “Existing markets include China, Canada and Mexico -- U.S. farmers’ first, second and third largest foreign customers. U.S. agricultural exports in FY-2016 were nearly $27 billion to China, over $24 billion to Canada and nearly $19 billion to Mexico. Disrupting U.S. agricultural exports to these nations would have devastating consequences for our farmers and the many American processing and transportation industries and workers supported by these exports.”

I can be reached at Chris.Clayton@dtn.com

Follow me on Twitter @ChrisClaytonDTN

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