Several U.S. agricultural groups are urging the administration to expand existing investigations into unfair trade practices to cover agricultural commodities – or mount a new agriculture or commodity-specific trade probe.
The Office of the U.S. Trade Representative launched two trade investigations last month, into excess manufacturing capacity in 16 economies and dozens of partners’ efforts to curb imports of products made with forced labor. The probes could be used to justify new tariffs, and the administration has signaled that it will use them as a vehicle to replace some of the duties struck down by the Supreme Court earlier this year.
The administration has said that further investigations – initiated under Section 301 of the Trade Act of 1974 – could cover rice and seafood, among other issues.
In public comments filed this week as part of the first two investigations, agricultural groups urged the administration to consider expanding the existing investigations to cover their commodities or launch new probes.
“[W]e urge USTR to expand the scope of this investigation – or initiate a new one – to examine the European Union’s harmful agriculture trade policies,” a submission from the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) reads.
In their submission NMPF and USDEC argue that Europe’s shifting requirements for import certificates, insistence on specific farming and production practices and use of geographical indicators to advantage their producers in international markets warrant further scrutiny and potential trade remedies.
Several other industries also singled out the EU as a candidate for a commodity or agriculture-focused 301 probe. The U.S. processed peach industry argued that the bloc never reduced its subsidies for the industry after losing a trade case at the World Trade Organization’s predecessor in the 1980s.
California’s wine grape industry also argued European, Chilean and Australian subsidies are “creating or maintaining structural excess capacity and production.”
The European Union is among the subjects of both the forced labor and overcapacity investigation.
Similarly, the dairy groups call for a probe into Indian trade practices in their filing.
The U.S. rice industry also used its submission to press USTR to expand the scope of the existing investigation into manufacturing overcapacity to cover countries’ practices in global rice markets.
“While the current investigation focuses on manufacturing, agriculture — and rice in particular — exhibits many of the same structural excess‑capacity characteristics USTR is examining elsewhere,” a filing from Mollie Buckler, president and CEO of the US Rice Producers Association, says.
The U.S. rice industry is up against a “structural competitive crisis,” Buckler argues, as India and Thailand use government purchases, subsidies, minimum price supports and direct cash payments to expand their production beyond market demand.
The American Sugar Alliance also appealed to officials to include sugar in its manufacturing capacity probe.
“As waves of foreign overproduction crash into the American market, U.S. producers are left to face a domestic market where prices are depressed below costs of production and very close to forfeiture levels under the U.S. sugar policy,” the submission reads.
The protections offered by the U.S. sugar program, which uses a fixed tariff to deter imports above a predetermined level, has been eroded by years of inflation and a widening gap between domestic and world prices.
The sugar producers already have an ally in Sen. John Hoeven, R-N.D. He told Agri-Pulse earlier this month that he has been asking the administration to consider trade remedies on sugar, including by mounting a Section 301 probe.
“I think we’re going to do it,” Hoeven said in an interview.
However, sugar importers also used the latest public comment period to present their counterarguments. Sweetener Users Association President Richard Pasco said that a Section 301 investigation would be an “unsuitable vehicle” for additional sugar tariffs.
The U.S., Pasco argues, already has tariff-rate quotas in place to address surplus capacity from overseas industries. If the administration wants to curb rising volumes of out-of-quota imports, it can issue more quotas to producing countries or expand the quotas given to Mexico under a suspension agreement.
Both arrangements require sugar to enter at the U.S. price, not the much lower world price, Pasco notes.
Some ag sectors could also be covered by the existing trade probes.
A filing from the California Tomato Growers Association points out that China has expanded its tomato processing industry in Xinjiang province, where human rights groups and international organizations have found evidence of human rights abuses and forced labor.
The U.S. has taken steps to eliminate products made with forced labor from its supply chains. But without other countries doing the same, Chinese tomatoes could be in downstream products made elsewhere that are then exported to the U.S.
“If the covered economies cannot be persuaded to impose and enforce absolute bans on the importation of processed tomatoes made in whole or in part with processed tomato products from China … the goods shipped to the United States from these economies should be subject to appropriate [Section] 301 tariffs.”
Even if agriculture-specific issues are not considered as part of the two Section 301 probes, that doesn’t mean that they won’t see new tariffs applied to their sectors. If USTR determines that economies’ manufacturing overcapacity or forced labor issues warrant tariffs, they can apply them to any sectors the administration sees fit.
Among the more than a thousand comments on both dockets as of Wednesday night were also groups urging the administration to take a targeted approach to any new tariffs.
Several groups implored the administration to ensure any tariffs resulting from the 301 probes replicate exemptions applied to the emergency tariffs struck down in February, which included goods covered under the U.S.-Mexico-Canada Agreement and some agricultural inputs. Others, including the American Soybean Association and the U.S. Soybean Export Council, urged the administration to expand those exemptions to include more critical agricultural inputs.
The American Seed Trade Association also cautioned the administration against reinstating a flat tariff rate across almost all of an economy’s exports – as it did with the tariffs imposed under the International Emergency Economic Powers Act last year.
“[A] flat tariff rate applied across all sectors does not reflect the diversity and realities of global supply chains,” the submission reads. “The complexity of the U.S. seed industry’s [research and development] and production needs depend on seed movement between over 100 markets,” it concludes.
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