Trade pacts take center stage this week

Legislative Watch: Phase one with China done; USMCA passes Senate; Packers and Stockyards proposal outlined; impeachment hearing begins.

P. Scott Shearer, Vice President

January 17, 2020

4 Min Read
Global trade illustration
Getty Images/iStockphoto

It was a big week for U.S. trade as two major strides forward were completed as phase one of the China trade deal was signed on Wednesday, only to be followed up by the U.S. Senate passing the U.S.-Mexico-Canada Agreement on Thursday.

In a White House ceremony, President Trump and Chinese Vice Premier Liu He signed the long-awaited "Phase One" agreement between the United States and China. The agreement will take effect on Feb. 14.

Under the agreement China has pledged to purchase $200 billion each year for two years of U.S. goods in four industries — $75 billion in manufactured goods, $50 billion in energy, $40 billion in agriculture and $35-40 billion in services.

The agreement deals with sanitary and phytosanitary issues concerning meat, poultry, seafood, dairy, infant formula, rice, potatoes, nectarines, blueberries, avocadoes, barley, alfalfa pellets, hay, feed additives, distillers' dried grains and pet food. Also, the agreement streamlines the approval process for agricultural biotechnology.

It will expand the allowable product scope for U.S. pork and pork products, including bungs and intestines and processed products. China agreed to conduct a risk assessment for the veterinary drug ractopamine, which may be used in U.S. beef and pork production.

Related:NPPC says phase-one trade deal with China a good first step

The agreement addresses a number of beef issues.

  • Expands the scope of beef and processed beef products allowed to be imported.

  • Eliminates age restrictions for beef and beef products upon completing a risk assessment.

  • Recognizes U.S. beef and beef products' traceability system.

  • Establishes maximum residue levels for three synthetic hormones legally used in the United States and consistent with CODEX standards.

  • Begins technical discussions with the United States to lead to an agreement for importation of live breeding cattle.

The United States will maintain tariffs on approximately $370 billion of Chinese goods. Retaliatory duties by China remain in place. The National Pork Producers Council urges China to eliminate all tariffs on U.S. pork. The U.S. pork industry faces a cumulative tariff of 68% compared to 8% for competitors.

USMCA passes Senate
The Senate passed the USMCA by a vote of 89-10. President Trump plans to sign the agreement next week. Mexico approved the agreement last December and the Canadian Parliament is expected to vote on it next month. The agreement goes into effect 90 days after all three countries have approved it.

Packers and Stockyards enforcement proposal outlined
USDA this week published in the Federal Register a proposed rule outlining the four criteria the Agricultural Marketing Service would consider when determining whether an undue or unreasonable preference or advantage has been given in violation of the Packers and Stockyards Act.

Related:Senate overwhelmingly approves USMCA

The proposal specifies the four criteria USDA would consider when determining if there has been a violation of the act. USDA says in a press release, "The proposed criteria will serve as a basis to determine whether these differences are a reasonable and fair preference or advantage."

Under the proposed rule, USDA would consider whether a preference or advantage meets one or more of the criteria below.

  • Cannot be justified on the basis of a cost savings related to dealing with different producers, sellers or growers.

  • Cannot be justified on the basis of meeting a competitor's prices. 

  • Cannot be justified on the basis of meeting other terms offered by a competitor.

  • Cannot be justified as a reasonable business decision that would be customary in the industry.

USDA would not be "limited to considering only these four criteria but could also take other factors into consideration as appropriate on a case-by-case basis. The proposed rule retains necessary flexibility while providing greater clarity around what may constitute a violation."

The North American Meat Institute says, "Any rule must protect marketing agreements between packer/processors and livestock producers, which provide stability to the industry and benefits consumers with lower prices and better-quality meat and poultry. Eight federal appellate courts have concluded that the Packers and Stockyards Act requires a plaintiff to show actual or likely harm to competition. Without such a requirement, frivolous lawsuits could flood the courts and hurt the producer-processor relationship, ultimately harming those the law is intended to protect."

In 2017 the USDA withdrew the proposed Grain Inspection, Packers and Stockyards Administration rule by the Obama administration which was strongly opposed by the NPPC, National Cattlemen's Beef Association, National Chicken Council and NAMI.

Public comments are due by March 13.

Impeachment trial begins
The impeachment trial of President Trump began this week and will resume next Tuesday. The Senate still must decide if witnesses will be called to testify during the trial. The Senate will not be considering any other legislative issues during the trial.

Source: P. Scott Shearer, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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