Trade War and Government Shutdown Hit U.S. Ag
Anxiety reigns in the United States agricultural sector as the European Union refuses to consider provisions for agriculture in the upcoming US-EU trade talks. The talks, which have been in the making since July, were not initially planned to include discussions of agricultural matters, apart from a plan to increase European soybean imports from the United States. However, in a list of objectives released on January 12, the White House indicated a desire to engage in a full discussion on agricultural exports to the European Union. In response, EU trade commissioner Cecilia Malmström announced that any talks about agriculture were off the table.
The White House’s decision is likely the result of a variety of circumstances. Agricultural exports have dwindled with the Trump administration’s trade war with China--and farmers have become increasingly frustrated with the situation. Additionally, a new Congress has just convened, with Democrats in control of the House of Representatives and an influential farm lobby talking to members from both parties. In such a political climate, the administration probably realizes that any trade deal without an agricultural component is unlikely to gain much traction in Washington. The impasse is disheartening for leaders in the agricultural sector, but they maintain that a trade deal that fails to consider farm products would be unacceptable.
According to Rebecca Bratter, Executive Director of the US Dry Bean Council, such an agreement simply wouldn’t make sense. If United States tariffs on European steel and aluminum were to be lifted, she says, it wouldn’t be unreasonable for the EU to consider anew US farm products. Furthermore, she points out that the Trans-Atlantic Trade and Investment Partnership (TTIP), the last major effort at forging a trade agreement, included agricultural provisions. As for European objections to certain protectionist measures by the United States, she says that the EU has historically enacted such policies far more vigorously. “Prior to this administration, we’ve been one of the most open markets in the world, she says. “Things are a little different now, but, still, I don’t think the EU has a leg to stand on saying another country is protectionist.”
The tense situation is further complicated by the ongoing US government shutdown. On Wednesday, Senator Chuck Grassley (R-IA) issued a dire warning that the trade talks could be delayed as a result of the political crisis. Although Trump administration officials reportedly dismissed such concerns, there are many in the agricultural sector who share them. According to Bratter, the shutdown is deeply worrying. “I think the ongoing government shutdown is adversely affecting everything,” she says. “Negotiations, the economy, trade, agriculture, you name it.”
To make matters worse, the shutdown has already had a negative impact on American farmers. Growers hard-hit by the trade war are currently experiencing a delay in insurance payments due to the Agriculture Department’s closure. "Farmers are struggling right now. All prices are low, and we're trying to cash flow, and we're making spring planting decisions right now. So it's really important to get these harvest prices announced and get that money in growers' hands," said Tim McGreevy, CEO of the USA Dry Pea & Lentil Council, to CNBC.
Although optimism isn’t abounding at the moment, industry leaders are still set on an agricultural objective for the negotiations. “A trade agreement with the EU would be wonderful,” says Bratter, “but it has to be the right one, and not including agriculture doesn’t make sense.”