Major Agricultural Trade Issues in the 114th Congress

Summary

Trade, particularly exports, is critical to the vitality of American agriculture. On average, foreign markets absorb about one-fifth of U.S. agricultural production, thus contributing significantly to the health of the farm economy. The positive economic effects of trade in farm products are felt well beyond the farm gate. Farm product exports make up about 10% of total U.S. exports and contribute positively to the U.S. balance of trade. The economic benefits of agricultural exports also extend across rural communities, while overseas farm sales help to buoy a wide array of industries linked to agriculture, including transportation, processing, and farm input suppliers. Moreover, most of the future growth in food demand is expected to occur in developing countries.

Trade, including agricultural trade, is clearly on the national agenda in the 114th Congress. The United States is engaged in negotiating two large regional trade agreements—the Trans-Pacific Partnership (TPP) among 12 Pacific-facing nations, and the Transatlantic Trade and Investment Partnership (T-TIP) with the European Union. These agreements hold the potential to expand foreign markets for U.S. farmers and food processors by eliminating, or substantially lowering, tariffs and restrictive quotas around certain commodities, such as rice and pork in Japan, or by dismantling supply management programs that protect poultry, eggs, and dairy in Canada. Also on the negotiating agenda are non-tariff trade barriers, including certain sanitary and phytosanitary (SPS) measures that governments employ to safeguard human, animal, and plant health, but which may also be used to deter imports. Geographic Indications (GI) that restrict the use of common names for certain agricultural products and can thereby impede trade in U.S. farm products are on the agenda of U.S. negotiators in both TPP and T-TIP. At the global level, further liberalization of agricultural trade is an objective of the Doha Round of multilateral trade negotiations under the World Trade Organization (WTO), but those talks have effectively stalled.

Numerous other trade issues of importance to U.S. agriculture are currently in play. Among these, U.S. producers are often subject to import bans that are not supported by internationally recognized animal health and food safety standards, including bans on U.S. poultry products due to avian influenza, and on beef and pork owing to the use of ractopamine to boost weight gain and meat yield. At the same time, the United States currently is appealing a WTO decision that determined its country-of-origin labeling (COOL) regulations on marketing of meat violate its WTO obligations. President Obama’s overture in December 2014 to engage Cuba and normalize relations has drawn the support of many in the agricultural community who see the potential to markedly expand exports of U.S. agricultural products to Cuba if Congress were to further ease, or remove entirely, existing restrictions on trade with that country. Agreements the United States struck with Mexico late in 2014 have recast the terms of bilateral trade in sugar, but the two suspension agreements currently are being challenged by some U.S. sugar refiners.

Congress traditionally has displayed a keen interest in agricultural trade issues given their importance to agriculture and to the economy at large. Congress has a consequential role to play in many of these trade matters—from providing direction to U.S. trade negotiators within the context of TPP or T-TIP to considering whether to provide the Administration with Trade Promotion Authority (TPA) to facilitate the negotiation and congressional consideration of any trade agreements. Also of potential interest if Congress considers trade legislation are trade-related programs for which authorization has expired. Two such are Trade Adjustment Assistance for Farmers (TAAF), which provides technical and financial assistance to producers who are adversely affected by import surges, and the Generalized System of Preferences (GSP), which provides duty-free tariff treatment for certain products from designated developing countries.