Trump Imposes $200 Billion in Tariffs on China; China Retaliates

On Monday, September 17 President Trump announced the imposition of 10 percent tariffs on $200 billion worth of imports from China. These tariffs come on top of the $50 billion worth already imposed earlier this year, meaning nearly half of all Chinese imports into the United States will soon face levies. The tariffs will go into effect on September 24 and will remain at 10 percent until the end of the year. If China does not make adequate concessions, the new tariffs will then increase to 25 percent on January 1, 2019.

The United States Trade Representative (USTR) published a list of the wide range of products that will be affected.

Later on September 17, China retaliated with tariffs of 5 to 10 percent on $60 billion of imports from the United States. China’s retaliatory tariffs, on items ranging from meat to wheat to aircraft, are also set to take effect on September 24.

U.S. FDA Announces new Export Certification Program

On August 31, the U.S. Food and Drug Administration (FDA) announced its new export certification program for certain FDA-regulated products such as grains, processed foods, food additives, color additives, food contact substances, and infant formula. The FDA may charge up to $175 for each certification.

The FDA anticipates that this new export certification will facilitate trade by assisting U.S. food exporters in fulfilling importing country requirements for FDA certification of FDA-regulated food products. Exporters should note that the FDA’s export certification program for foods is intended to be complementary to export certification for foods currently issued by other U.S. government agencies. As the FDA launches this new export certification program for foods, the arrangements currently in place for certain food commodities with other U.S. government agencies will remain the same.

The FDA will begin issuing and collecting fees for the new export certifications on October 1, 2018. For more information, see the Federal Register notice.

USDA Releases Methodology Behind Trade Mitigation Programs

On September 13, the United States Department of Agriculture (USDA) released the methodology used in calculating trade damage estimates for its Market Facilitation Program (MFP) and Food Purchase and Distribution Program (FPDP). USDA developed an estimate of gross trade damages for commodities with assessed retaliatory tariffs by Canada, China, the European Union, Mexico, and Turkey to set commodity payment rates and purchase levels in the trade mitigation package announced by USDA earlier this month.

In the report, the USDA’s Chief Economist Robert Johansson explained that the gross trade damage only reflects direct export losses due to the retaliatory tariff imposed on the U.S. commodity. Indirect or secondary effects from the tariff, such as cross-commodity effects, are not reflected in the gross trade damage estimate.

Find the full text of the Trade Methodology Report here.

USDA Launches Trade Mitigation Programs

On September 4, U.S. Secretary of Agriculture Sonny Perdue launched the U.S. Department of Agriculture’s (USDA) trade mitigation programs aimed at assisting farmers suffering from unjustified trade retaliation by foreign nations. In July, the USDA announced it would authorize up to $12 billion in programs to mitigate retaliatory tariffs against the U.S. agriculture.

The following programs will be used to assist agricultural producers:

• USDA’s Farm Service Agency (FSA) began administering the Market Facilitation Program (MFP) to provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers on September 4, 2018.  The USDA will spend $4.7 billion in this first payment period.  The second payment period, if warranted, will be determined by USDA.
• USDA’s Agricultural Marketing Service (AMS) is administering a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities unfairly targeted by retaliatory tariffs. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs.
• Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP), $200 million will be made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions.

MFP applications are currently available online at www.farmers.gov/MFP. Producers can submit their MFP applications in person at a local FSA office, by email, fax, or by mail. For more information about the three programs listed above, please click here.

United States-Mexico Trade Agreement

On August 31, U.S. President Donald Trump issued a notice of intention to enter into a trade agreement with Mexico – the bilateral “United States-Mexico Trade Agreement.” In the notice the Trump Administration indicated that this agreement, which is set to supersede the U.S.-Mexico commitments under NAFTA and resulted from ongoing NAFTA negotiations, was still open for Canada to join.  The notice sets off a 90-day Congressionally mandated window before the President can sign the agreement.

The deal includes significant efforts to address agricultural non-tariff barriers. In addition, it weakens NAFTA dispute settlement provisions and introduces a six-year review process. Other details of the agreement include:

• Zero tariffs on agricultural products traded between the U.S. and Mexico.
• Instead, the U.S. and Mexico agreed to a 16-year lifespan for the agreement, with a review every six years that can extend the pact for 16 years more.
• Eliminating NAFTA’s Chapter 19, a settlement system for anti-dumping disputes.

Canadian Foreign Minister Chrystia Freeland and Canadian trade negotiators remain in Washington to continue bilateral talks with U.S. Trade Representative Robert Lighthizer to explore the possibility of signing on to the agreement. Both the U.S. and Mexico worked to reach this deal by the end of August, giving Trump enough time to notify Congress of the finalized deal and have the deal signed by current Mexican President Nieto before President-elect Lopez Obrador takes office on December 1.

U.S.-Mexico Preliminary Trade Agreement

On August 27, U.S. President Donald Trump and Mexican President Enrique Pena Nieto announced that both countries have reached a preliminary trade agreement with Mexico called the ‘United States-Mexico Trade Agreement’ as part of negotiations of the North American Free Trade Agreement (NAFTA). Details of the deal have yet to be released, but briefing papers from the Office of the U.S. Trade Representative indicate that the deal includes significant efforts to address agricultural non-tariff barriers, as well as weaker dispute settlement provisions and the requirement for a review process.

Canadian trade negotiators arrived in Washington on Tuesday to join the discussions and explore the possibility of signing on to the agreement. Both the U.S. and Mexico have attempted to reach a deal by the end of August – this would give Trump enough time to notify Congress of the finalized deal and have the deal signed by current Mexican President Nieto before President-elect Lopez Obrador takes office on December 1.

Please click here for more information.

USDA Trade Mitigation

On August 27, the U.S. Department of Agriculture (USDA) announced details regarding actions it will take to assist farmers in response to trade damage from unjustified retaliation by foreign nations. In July, the USDA announced it would authorize up to $12 billion in programs to mitigate retaliatory tariffs against the U.S. agriculture.

The following programs will be used to assist agricultural producers:

• USDA’s Farm Service Agency (FSA) will administer the Market Facilitation Program (MFP) to provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers starting September 4, 2018.  This is the first payment period.  The second payment period, if warranted, will be determined by USDA.
• USDA’s Agricultural Marketing Service (AMS) will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities unfairly targeted by retaliatory tariffs. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs.
• Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP), $200 million will be made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions.

Beginning September 4, MFP applications will be available online at www.farmers.gov/MFP. Producers can submit their MFP applications in person, by email, fax, or by mail.

Deregulation of GE Canola

On August 24, the USDA’s Animal and Plant Health Inspection Service (APHIS) announced the deregulation of Nuseed Americas’ canola variety genetically engineered (GE) to contain in its seed increased levels of docosahexaenoic acid (DHA), which is an omega-3 fatty acid.

Please click here for more information, including the final plant pest risk assessment and final environment assessment.

Arvid Hawk retires

Senior Advisor Arvid Hawk announced his retirement from NAEGA earlier this month, marking the end of a long and distinguished career in the industry.

Arvid Hawk began his career with Cargill, Inc. as a Research Engineer. In this capacity, he conducted research in grain drying, aeration, dust control, grain dust explosions, mold testing, aflatoxin testing, sampling and grain inspection methods. During this period, he became active in liaison work with various trade associations and became interested in and familiar with The Federal Grain Inspection standards and procedures. He also became Cargill’s in-house expert on international phytosanitary rules and regulations. In 1980, he took over the position of Grain Handling Coordinator for the North American Grain Division of Cargill. His responsibilities in this job were to give technical advice to plant superintendents, managers, merchants and traders in all of the technical areas mentioned above.

Before his retirement from Cargill, he served as Chairman of NAEGA’s Grades and Inspections Committee and was awarded NAEGA’s Amstutz Award in 2006 for exhibiting exceptional accomplishments in promoting export grain and oilseed trade from the United States. Currently, Arvid is a consultant on agricultural issues for Global Agricultural Consulting, LLC.

We are extremely grateful for the many years of work and expertise Arvid has contributed to NAEGA initiatives and wish him the best in his future endeavors.

OFAC Updates Sanctions List

The U.S. Treasury’s Office of Foreign Asset Control (OFAC) recently updated its Specially Designated Nationals (SDN) list. The SDN list is a list of individuals and companies owned, controlled by, or acting for or on behalf of targeted countries. Also included on the list are non-country-specific individuals, groups and entities such as terrorist organizations. Any person or entity included on the SDN list has their assets blocked and U.S. citizens are prohibited from engaging with them.

Newest additions to the list include Qassim Abdullah Ali Ahmed following his designation as a terrorist; Profinet, a Russian shipping agency found to be supplying bunkers to North Korean vessels at Russian ports; and the National Iranian Oil Company. A number of Iranian entities have been re-sanctioned in connection with the U.S. withdrawing from the Joint Comprehensive Plan of Action (JCPOA) in May.  

Find the latest version of the SDN list here.