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Ambassadors hash over trade deals, WTO and effectiveness

 

WASHINGTON, D.C. — The World Trade Organization (WTO) and global trade were the focus of four former and current U.S. ambassadors during a Farm Foundation Forum last week.

The four-member panel spans three administrations and almost 20 years of agricultural trade negotiations. With talks of trade wars between China and the United States – and the U.S and everywhere else – the general consensus among the ambassadors was that trade and trade agreements are necessary for the U.S. economy, and updates to systems are needed.

Less agreement was reached on the correct method to attain new agreements.

Ambassador Gregg Doud, chief agriculture negotiator for the Office of the U.S. Trade Representative, provided updates on several trade deals, including the North American Free Trade Agreement (NAFTA), where progress continues, even if it is slow going.

He said it is better for NAFTA to be done right than in a hurry. The original agreement is 25 years old, written at a time when the Internet was barely beginning. It built on a 1988 agreement between Canada and the U.S., adding Mexico.

Agriculture exports from the U.S. are around $138 billion. NAFTA accounts for about $38 billion of that, Doud noted.

“In just about any commodity you want to discuss, Canada and Mexico are two of the top four markets for us in agriculture,” he said.

Japan is the focus of future bilateral trade deals in his office, Doud explained. He knows people are frustrated about the multilateral Trans-Pacific Partnership (TPP), but he thinks it was a good base for bilateral agreements with the same countries.

With the exception of Japan and Vietnam, the U.S. has agreements with most of the countries in the TPP, and trade negotiators will be visiting both Japan and Vietnam in the coming weeks.

The United States has a case in the WTO against China, one of the largest in history; China hasn’t filed information about domestic supports since 2010, he said. The U.S. has also filed counter-notifications against India with the WTO – this is not as serious as a case, but does indicate to India that other countries are watching.

Doud said the two countries have about 40 percent of the world’s population and other nations don’t have a good feel for how the farmers are being supported.

Today, about 38 percent of the world’s corn, 22 percent of soybeans, 52 percent of the world’s residual supply of wheat, 67 percent of the residual supply of rice and 42 percent of the residual supply of cotton is in China. The levels are costly to farmers around the world, not just the United States, he said.

The residual supply of corn has dropped almost 10 percent in recent years, from about 45 percent. Doud thinks the Chinese government has begun to realize something the U.S. realized in the 1980s: “In 1986, 60 percent of corn stocks we had in this country were owned by the government. It was an unmitigated disaster,” that he said led to the decoupling of U.S. farm programs.

Even while the administration uses the WTO to address some global trade concerns, President Donald Trump has made statements about the inefficiencies of the organization and the possibility of a U.S. withdrawal.

Ambassador Darci Vetter is vice chair for Agriculture, Food and Trade at Edelman and former chief agriculture negotiator, and said the WTO was developed and largely based by the United States. People around the world look to the U.S. to make the system work, she said.

The WTO has growing pains, but the U.S. has previously been unwavering in its commitment to the WTO, she said. The focus of U.S. negotiators should be first on what’s best for the United States and second, on how it might impact the world and the WTO.

Vetter said the WTO has helped the U.S. by implementing a series of commitments, brought down trade barriers and held other countries to the standards the agency sets.

“We have a ways to go, but we have a framework to do it in, and we have a place to raise issues, including a dispute settlement body when countries are outrageously out of step with that (framework),” she explained. “It’s not fast and it’s not easy, but it has a lot more teeth than other international institutions.”

She said the framework of the WTO still needs attention, but it’s a bigger benefit than it is credited for, especially in regard to communications. Conversations can take place in the WTO around topics like food safety rules and how they’re used as food safety compared to protection.

Other agriculture organizations have more strength as a result of being recognized by the WTO. When a developing country wants to join the group, there is a framework or requirements laid out, she said.

Developing countries often have the most to gain by being a part of the WTO or trade agreements like the TPP. Vetter said economists around the world said Vietnam would be the biggest winner of the TPP because the country has the most work to do to reach the guidelines laid out in the agreement by lowering tariffs and improving safety standards and imports, that help improve the economy.

The Trump administration has said it wants to focus on bilateral deals because it gives the U.S. more leverage. Vetter doesn’t agree; regional deals are important because the U.S. can pick who is in them and every product is on the table, even when one country might want to leave one out.

She said she views her job as decreasing risk and increasing opportunity for farmers.

5/30/2018