Katherine Tai Chastised By Farm State Senators Over Market Access, Free Trade Deals

Katherine Tai Chastised By Farm State Senators Over Market Access, Free Trade Deals

USTR Katherine Tai was repeatedly taken to task by farm state senators in Wednesday’s Senate Finance Committee hearing for what they see as lackluster attempts at opening markets for U.S. agriculture exports.

Ranking Member Mike Crapo (R-ID) was first to chastise Tai about agriculture exports. Then came Sen. John Cornyn (R-TX), who is rumored to replace Mitch McConnell (R-KY) as the Republican leader in the Senate, who went after Biden for not “signing any new free trade agreements” and “opening any new markets to American farmers and ranchers”. 

Sen. John Thune (R-SD) said that one of the reasons the U.S. is now a net importer of food is because we don’t export enough. He blamed that on Biden and on chief trade negotiator Tai.

“I can’t see anything that we are doing on market access,” Thune said. “But I see that we have the largest ever agricultural trade deficit, forecast to be $30 billion this year. Market access is what our farmers and ranchers are looking for,” he said, then proceeded to discuss trade agreements where it was the other side — in this case the U.K. — that rejected market access for agriculture, not Washington. “There is not a single person in the Biden Administration that has looked into increasing US agricultural exports in 2024,” Thune said.

In each round of questioning, Tai stood her ground and reminded Committee members aching for World Trade Organization case victories against China and more food commodity exports, that it is a new world out there when it comes to trade liberalization. And that no matter what the U.S. has done with China in the WTO, it has not resulted in anything. She called the strategy of trade cases against China at the WTO “ineffective”. 

Tai also repeated what she said on Tuesday to the House Ways & Means Committee that the U.S. opened brand new markets for American agriculture in India, items that Indian producers do not grow, such as almonds, blueberries and cranberries, one being important to the California economy and the latter two decimated by imports from free trade agreements with Canada and Mexico.

“There’s a lot we have done in the last three years on market access and trade, and that includes the 2022 safeguard agreement we have renewed from Japan that allows U.S. beef to increase its access to Japan,” she said. “Market access can come in singles and doubles as opposed to tying up opportunities into free trade agreements (FTA) that never come into being. There are no easy FTAs,” she said, then took Thune to task on the U.K. free trade deal he said was “low hanging fruit” for Biden to sign with our allies across the Atlantic. 

Last summer, U.K. Prime Minister Rishi Sunak said an FTA with the U.S. was “no longer a priority.”

Tai gave an example of how agriculture market access is often a losing argument in FTA talks.

“I don’t know if you have followed this, but the U.K. and Canada have stopped trade talks because the U.K. will not open its agriculture market to Canada,” Tai told Sen. Thune in Wednesday’s hearing. “Agriculture access is something that also frustrates our efforts at large FTA agreements with the EU. We are concerned just like you about the agriculture trade deficit. But I wish our agriculture champions were as concerned with our industrial goods deficit as they are with our agriculture deficit. In addition to a strong U.S. dollar, we also have a very strong domestic consumer economy that leads to imports.”

Last year, the U.S. posted a roughly $1.03 trillion deficit in manufactured goods.

Agriculture is consistently used as a battering ram to promote free trade agreements. 

Tai reminded the Committee that trade is a two way street and some countries are not interested in providing market access for some of the agricultural commodities American farmers want. This is especially true in poorer countries with large agrarian communities that often survive on subsistence farming and ranching. Imports of similar food items, be it pork meat or corn, would threaten the livelihood of those communities. If wealthy countries in Europe are loath to open markets to American agricultural producers of the same commodities, then it should be assumed the same would hold for smaller markets.  

Tai told the House Ways & Means Committee on Tuesday that it was important for American farmers to diversify their crops, rather than count on the big commodity trades like soy, corn and beef.

Bill Bullard, CEO of R-CALF USA, and a CPA Board member, said that the USMCA was also supposed to provide new markets for American agriculture. It has not. Global meatpackers and other food giants continue to import rather than source locally. 

“We have opened new markets with cattle and beef exporting countries by giving them access to our markets, too, but they do not reciprocate,” Bullard said. Bullard was not at the hearing.

For example, in 2023, the U.S. imported 6.67 million pounds of beef from Australia but they imported 1.7 million pounds from the U.S.  The U.S. imported 430 million pounds of beef from Brazil, while they imported only 320 thousand pounds from the U.S.. The U.S. imported 1.02 billion pounds of beef from Canada and exported 269.65 million pounds to Canada.

While one can make the argument that we are a much larger beef market than Australia, the trade gap shown in those three countries alone, all of which have market access for U.S. beef, are a testament to why there is an agricultural trade deficit.

“The reason additional market access abroad is not essential to the wellbeing of the U.S. cattle industry is because the U.S. cattle industry underproduces for our own domestic market, and has for decades, because imports continue rising. That means the opportunities to increase domestic production are hamstrung,” Bullard said.

Since NAFTA, which opened markets for U.S. agriculture in Mexico and Canada — a trade deal even Tai calls the “gold standard” — the nation’s beef cattle herd has declined by 18%, and there are 32% less ranchers operating in the country.

In another example of how the Senate might not be on the same page with other countries when it comes to the agriculture trade, Senator Charles Grassley (R-IA) asked Tai for an update on ethanol commerce with Brazil.

He asked for tariffs on sugarcane ethanol from Brazil.  Sugarcane ethanol competes with U.S. corn ethanol. He said Brazil promised to import more corn ethanol and reduce restrictions on U.S. exporters. The sugarcane industry is an important market for Brazil.

Tai said the issue was a “high priority” at USTR but noted, “the Brazilians said they are working on it.”


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