Mexico’s decree banning biotech corn, Canada’s refusal to play by dairy import rules, and emerging trade markets offering vast untapped potential for American farmers.
They’re massive topics, and just a few of the things Chief Agricultural Negotiator in the Office of the United States Trade Representative (USTR) Doug McKalip has on his plate right now. From the sounds of it, he’s digging in.
McKalip talked trade with Michigan Farm Bureau members during the organization’s Washington Legislative Seminar (WLS), giving updates on work being done to boost American ag products throughout the world.
He credited farmers with driving record export values in 2022 — totaling nearly $200 billion — which have grown by $70 billion in just the past four years.
“If you go back 20 years, we were at about $58 billion of us agricultural exports, so it’s just tremendous growth in a relatively short period of time,” McKalip said.
“That is all due to the hard work of all of you. It is due to the high quality and consistency of the products that you grow, and it is due to the hard work of folks like you coming into Washington and advocating on behalf of your issues in advocating on behalf of U.S. agriculture.”
What’s ahead for Mexico’s biotech corn ban?
The long-running feud with Mexico’s government over banning the import of corn grown with biotechnology and certain herbicides has the USTR taking the first steps toward formal action under the U.S.-Mexico-Canada Agreement (USMCA).
USTR requested “technical consultations” with the government of Mexico, which will initiate formal discussions between leaders from both countries.
MFB members asked McKalip about what concessions might be on the table to tempt Mexico to withdraw the decree.
His answer? None.
“We've got FDA, EPA, USDA and sometimes they take eight years to render their safety assessments. But when they're done with the process, we can unapologetically say that we know these products are not only safe, but they provide benefits sustainability benefits, quality benefits, benefits on yield,” McKalip said.
“So that's really what this whole thing with Mexico corn is about. It's about making sure that countries play by what they signed to. Everybody's using science and folks are held accountable of it that doesn't involve us having to make any concessions in the process.”
McKalip noted that Canada joined the U.S. in its request for consultations, and that meetings are set to start soon.
Dairy dispute continues
While Canada is aligning with the U.S. on corn, the USTR requested new dispute consultations over the country’s dairy tariff-rate quota (TRQ) allocation measures in December 2022.
The initial USMCA dispute panel found Canada in violation of USMCA’s TRQ provisions by reserving most of its preferential dairy TRQs for Canadian processors.
Canada released its revised approach to TRQs in March 2022, which still violated the USMCA by giving unfair advantages to Canadian dairy producers.
“The promise of market access that our farmers expected and deserved has not been realized so far with the Canadian marketplace,” McKalip said.
“So, we will take what we have already and focus this new panel effort, much more specifically, much more focused on the remaining issues, and continue to fight tenaciously to make sure that dairymen and dairywomen across the country are able to get real market access into Canada.”
If the U.S. and Canada are not able to resolve the matter through consultations, the U.S. may request the establishment of a panel under the USMCA
Help for specialty crop growers?
MFB members asked McKalip why he thinks specialty crops are having a hard time getting positive results in trade.
He said that even with row crops there are many complicated barriers to trade — and that those challenges are 10 times more complex for specialty crops.
While the USTR chose not to accept a petition from Florida growers to investigate Mexico’s effect on their specialty crops sector, McKalip said USTR did commit to forming a panel that would “closely examine” the issues that were being raised.
“We've got a team at USTR currently working on all of the bits and pieces that have to go into it, but it is our goal within the next three, five months to have that panel up and running,” McKalip said, noting that he has an open phone line and email for growers to share all relevant information on current challenges.
“Because ultimately, if you're not able to get across the hurdle to get things package shipped and have a buyer out there who's getting them, then we clearly aren't doing on our job,” McKalip added.
“So, it's an area that I care a lot about.”
Tapping the UK trade market
McKalip was happy to hear that a group of MFB members visited the embassy of the United Kingdom in Washington, D.C., during WLS to talk trade.
Dialogue is happening between the United States and the United Kingdom to explore issues and build relationships, including a potential trade deal. McKalip said he sat down with the new Secretary of Agriculture from the UK a few weeks ago after she participated in the National Association of State Departments of Agriculture’s annual meeting.
“We have a tremendous chance here to get compatible systems put in place and to really get our trading relationship to a new level that hadn't been while the UK was part of the European Union,” McKalip said.
“So, it's an area I think that we should be definitely putting a lot of time and effort.”
Diversifying around China
In May 2022, 12 countries — representing 40% of the world gross domestic product — launched the Indo-Pacific Economic Framework (IPEF).
Initial partners include Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
“IPEF provides us an opportunity with almost a dozen countries in Southeast Asia of getting agreements in place ahead of time about scientific regulation, about risk assessment, about import licensing, about port inspections, and get all of these things front loaded in future trade agreement,” McKalip said.
The progress that is made through IPEF is going to help the U.S. “diversify around China,” according to McKalip.
“We've got a lot of focus on the China market right now for good reason — it's a big one,” he said.
“But we need to be doing more in Asia of developing and further opening up additional marketplaces throughout Asia and around the globe.”
Other markets of note
McKalip is scheduled to make visits to Brazil to talk with government officials about the country’s 18% tariff on U.S. biofuels, noting that the U.S. does not have a tariff on Brazilian ethanol.
Then, McKalip will travel to Chile to work with the Chilean government on geographic indicators to ensure there are not barriers for American ag products based on package labeling.
After visiting Chile, McKalip will head to Australia for work on U.S. beef access — which is nonexistent right now.
“We've had a free trade agreement with Australia for almost 20 years now,” McKalip noted.
“And we have not successfully shipped one pound of beef to Australia since that free trade agreement came into place. That's not right, and that's something we're going to make very clear and to work on a solution with the Australian Government.”
