United States tariffs on steel and aluminum will cost the nation nearly $2 billion in agricultural exports each year -- even if a new trade deal with Mexico and Canada is ratified, according to a study from Purdue University. Purdue economists said the trade deal would increase food exports to those countries by about $454 million annually. But if the U.S. tariffs on steel and aluminum -- and the associated retaliatory tariffs on American agricultural products -- remain in place, exports to those countries will decrease by $1.8 billion."In terms of exports, it is relatively sizable when compared to the relative benefits we would get from the new trade deal," said Maksym Chepeliev, a research economist at Purdue, who was one of the authors. In the face of those losses, dozens of national agricultural groups joined together to ask the Trump administration to lift the tariffs on steel and aluminum."For many farmers, ranchers and manufacturers, the damage from the reciprocal trade actions in the steel dispute far outweighs any benefit that may accrue for them from USMCA," the groups wrote in a letter to the Department of Commerce and the Office of the U.S. Trade Representative.The letter was signed by representatives from 46 groups, including the U.S. Chamber of Commerce, the National Corn Growers Association and the National Pork Producers Council.The Trump administration levied a 25 percent tariff on steel and a 10 percent tariff on aluminum from Canada and Mexico on June 1. Canada and Mexico responded with a tariffs on U.S. products, including pork and corn.The USMCA was signed by leaders of the three nations Nov. 30, but it awaits Congress' approval for the U.S. to formally enter into the agreement.
From an economic perspective, we call the effects illustrated in these stories negative externalities; the shutdown negatively affects people who are not direct parties to the dispute. The shutdown creates negative externalities for farmers, consumers, fliers, workers and all recipients of the services provided by the agencies affected. By way of contrast, the disputants, Congress and the President experience no direct effects in the short-term. You don’t quickly solve a dispute when the people who are party to the dispute don’t feel the immediate pain. That leads us to a couple of suggestions to change the nature of government shutdowns.If the Senate won’t participate in the negotiations and refuses to act until the House writes legislation that is acceptable to the President, why do we need a Senate at all? They need to roll up their sleeves and do their job.These shutdowns typically involve departmental appropriations or a decision to increase the debt ceiling. The goal of a shutdown is to force the other side to cry “Uncle” and capitulate to the demands being made. We believe we need to establish policies to prevent shutdowns that involve the bulk of the federal workforce. The work they do is too critical to be subject to a shutdown.Instead of subjecting the general public to a shutdown, we suggest that the negative externalities be shifted to the disputants and their direct staff. If either the President or Congress want a shutdown to force the hand of the other, then limit the shutdown to the President and the executive staff of the White House, members of the Cabinet, and members of Congress and their staffs—not including the kitchen staff, the groundskeepers, the cleaning staff and the like.
The U.S. Department of Agriculture is improving the process by which it makes wetland determinations, updating guidance to improve consistency and timeliness as well as to responding to feedback from farmers and other stakeholders. The updates do not change the definition of a wetland for USDA program participation purposes, but rather provide greater clarity and uniformity in how NRCS makes determinations nationwide.Updates to the conservation compliance provisions include:Identifying that determinations will rely on precipitation data from 1971-2000. Though data and average rainfall have varied over time, using this specific dataset makes determinations more predictable.Clarifying the certification status of previously completed wetland determinations, including those completed 1990-1996.Adding definitions for playas, potholes and pocosins. These terms are found in current policy, but they are added to the regulation for transparency.Clarifying that determinations do not have to cover the entire farm tract, but only the area of the farm on which a producer is planning to make changes.Establishing that NRCS can now assess offsite, impacts on neighboring wetlands when producers request minimal effects exemptions. For those neighboring wetlands, NRCS can now do the evaluations off-site using aerial photography and other resources.
Payments from the Market Facilitation Program, administered by U.S. Department of Agriculture’s (USDA) Farm Service Agency, are also being misused. In 2018, President Trump pledged $12 billion through USDA’s Commodity Credit Corporation to provide direct aid to corn, cotton, dairy, hog, sorghum, soybean and wheat producers. Through the Market Facilitation Program, USDA has administered this direct aid to provide short-term relief to producers who are feeling the effects of ongoing trade disputes with foreign governments.In order to participate in the Market Facilitation Program, eligible applicants must have ownership in the commodity; be actively engaged in farming; have an adjusted gross income of less than $900,000 for 2014, 2015 and 2016; and comply with USDA’s Highly Erodible Land and Wetland Conservation regulations. Yet, a recent report from the Environmental Working Group highlights two major flaws in the way Market Facilitation Program payments are divvied up: Some farming operations are receiving excessive payments because they are able to take advantage of loopholes, like having numerous absentee managers or family members claim “active personal management.” Some of these payments are going to individuals who do not live or work on the farm.
USDA inserted a somewhat unusual notice in the Federal Register. This USDA notice was just three pages long and it was written in everyday English. Although it was proposing to take a radical step -- moving the Economic Research Service and the National Institute on Food and Agriculture out of Washington, D.C. -- it made scant effort to justify the move. The closest it came to stating a reason was a short phrase in a single sentence citing the opportunity to move the agencies "closer to its customers and facilitate economic development in Rural America." You'd think that before relocating two important agencies with more than 600 highly trained employees the government would have done some serious analysis, carefully weighing the pros and cons. There's no evidence the Agriculture Secretary Sonny Perdue and his team did that. Instead, the notice leapt immediately into soliciting expressions of interest to house the two agencies. It spelled out what USDA is looking for in the way of new sites. If the aim is to get government closer to its customers, ERS is already as close as it can get. The customers for its analyses of food and agricultural issues are Congressional and executive branch decision makers. NIFA awards research grants, which is a good reason it should not be located on a university campus, where its proximity to one group of grant applicants would raise concerns about favoritism. NIFA needs a neutral home with close links to other parts of USDA. If USDA wants to move agencies closer to farmers, it has any number whose customers really are farmers. Memo to Secretary Perdue: Move one of those, not ERS and NIFA.
House Democrats and Senate Republicans remain bitterly divided over President Donald Trump's call for border-wall funding, but they appear to be on the same page about delaying USDA's controversial proposal to relocate a pair of research agencies outside of the Washington area. A new Senate proposal to reopen the Agriculture Department and other agencies shuttered by the monthlong spending impasse takes issue with "unknown costs associated with the proposed move” of the Economic Research Service and the National Institute of Food and Agriculture.The Senate blueprint for ending the partial government shutdown, expected to be voted on this week, is perhaps the most prominent example of Republicans pushing back against Agriculture Secretary Sonny Perdue’s plan to relocate both research agencies before the end of 2019. The House is also expected to vote this week on an appropriations measure that includes similar report language calling for an indefinite delay of the ERS and NIFA proposals — demonstrating bipartisan support for slowing the USDA's effort.
As the U.S. and European Union trade negotiations unfold, the two sides have competing perspectives over what will be discussed: The U.S. has included agriculture in its Summary of Specific Negotiating Objectives, while the EU has not. Despite the discord, recent trade data indicates that the EU has purchased an increasing amount of U.S. soybeans. “Trump boasted of his verbal agreement with leaders of the European Union, (‘we’re starting the documents,’ Trump said as an aside), that would move toward the elimination of trade barriers. The Register article quoted President Tump as saying: “We just opened up Europe for you farmers. You’re not going to be too angry with Trump, I can tell you.” However, The Wall Street Journal reported on July 27th that, “While Mr. Trump told an Iowa crowd [July 26th] that ‘we just opened up Europe for you farmers,’ officials in Brussels later said he did no such thing.”
On Thursday, the House revived previously unpublished conference report language in an effort to move the fiscal year (FY) 2019 appropriations process forward. The specific language expressed concern about the U.S. Department of Agriculture’s plan to relocate and reorganize the Economic Research Service (ERS) and the National Institute of Food & Agriculture (NIFA). The report included language that had not been included in the 2018 Senate-passed FY 2019 agriculture appropriations bill, nor the agriculture appropriations bills put forward earlier this year by the House, according to a release from the National Sustainable Agriculture Coalition (NSAC), a vocal opponent of USDA’s plan to relocate the offices.
The European Union is willing to discuss car tariffs but will not remove duties on farm products in trade talks with the United States, its trade chief said on Friday, setting it on a possible collision course with Washington. The European Commission, which coordinates trade policy for the 28 member European Union, published two negotiating mandates on Friday, which were notable more for what they left out than for what they included.The EU proposal on tariffs falls far short of the wide-ranging wish-list, including comprehensive agricultural market access, set out by U.S. President Donald Trump’s administration a week ago.
Not withstanding, the president’s rhetoric, after 14 months of what appeared to be stressful negotiations, the new NAFTA (the U.S.-Mexico-Canada Agreement or USMCA) ended up looking a lot like the old NAFTA with relatively small changes in the agricultural provisions. The good news was not really that that there was promise of additional access to Canada’s dairy, poultry and eggs sectors (the benefits from which have been estimated to be small, increasing NAFTA exports by about 1 percent). Nor was it that the new agreement contains many modernization features (many of which had been negotiated in the TPP agreement). Far more significantly, the new agreement maintained the tariff concessions that had been negotiated in 1992 under the original NAFTA that substantially expanded access to Canadian and Mexican markets for U.S. agricultural producers. However, even the benefits from the original and new NAFTA agreements are currently being compromised by other trade actions initiated by the Trump administration. In response to the so-called Section 232 tariffs imposed against exports of steel and aluminum to the United States, Canada and Mexico have imposed retaliatory tariffs against a variety of U.S. agricultural products including pork and cheese. Those actions are estimated to reduce U.S. agricultural exports by as much as $2 billion, more than offsetting any gains associated with the changes embedded in the new NAFTA agreement.