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Trade negotiations getting tougher

Photo Courtesy of the Commodity Markets Council (CMC)

The United States is a trading nation and U.S. agriculture has benefited greatly from exports since the Russian Grain Deal of 1972.

In the current era, the relationship between nations is changing and becoming less conducive in renegotiating trade agreements, or abiding by the rules of past treaties.

Tomorrow, Friday, August 10, the U.S. Department of Agriculture will reveal its estimate for this year’s corn and soybean crops. The totals are far above what we can use domestically, so the value of exports will determine profit or loss by farmers.

Criticism of the original North American Free Trade Agreement (NAFTA) set in motion efforts to negotiate with Mexico and Canada. It is now clear that they have taken sharply different positions on NAFTA 2.0.

Chief Agricultural Negotiator Gregg Doud says Mexico is close to signing an agreement. Doud said at the American Sugar Alliance Symposium that the process has stopped with Canada “because the U.S. hasn’t had market access conversations with Canada of any substance.”

Doud says the agricultural issues with Canada have been the same for years, which is a veiled reference to their country’s dairy and poultry supply management programs. The negotiations with Canada have been very difficult, with Doud adding, “We’ve got to get to a situation where we can bring Canada on board and wrap this up.” His target date is the end of August.

In the same speech, Doud attacked both China and India for blowing past their World Trade Organization spending limits on farm subsidies that distort trade.

“We think China has done in excess of $100 billion more in subsidies to its farmers than it was allowed to do,” Doud said.

He also accused India of vastly exceeding its subsidy limits on rice and wheat, while also mentioning the country’s recent moves to increase subsidies to its sugar producers as a cushion against a drop in world prices.

“I can’t think of a commodity that’s more distorted,” Doud said to symposium attendees. “If you think there’s a problem in steel, take a long look at the sugar market.”

Doud says the Administration is working to wrap up talks on the North American Free Trade Agreement quickly. They’re also looking for new export opportunities in Canada, Japan and Europe.