CEDAR RAPIDS, Iowa — For years trade was a matter of long, complicated discussions to iron out often complex technical issues. Then, under the Trump administration, the approach shifted to in-your-face trade wars and agreements that were less technical and long-term and more dollar-oriented and short-term.
Now analysts are trying to get a feel for which approach the Biden administration is taking or whether it will choose a third path.
“It’s a never-ending cycle,” says Randy Miller, a farmer from southern Iowa who has gone on trade missions with the Iowa Soybean Association and now serves as president-elect of that organization. “Trade is always on the agenda.”
“The big issue, as always, is China,” says Dave Salmonsen, senior director for congressional relations at the American Farm Bureau Federation in Washington, DC
Phase I of the trade agreement with China has drawn to a close and there is no Phase II in place. China, for the most part, lived up to its phase I obligations, buying over $30 billion of US agricultural commodities. And that deal did include some technical issues that are permanent.
But, unlike previous agreements that were largely based on the technical issues such as phytosanitary standards, this one was primarily an agreement to buy a certain amount of goods. That worked, but because of that it was in many ways a short-term deal.
Most trade agreements are 1,500 pages of intricate detail, explains Chad Hart, an Extension ag economist at Iowa State University. This agreement was less than 100 pages.
“There’s nothing binding here, that’s the weakness of the deal,” Hart says. “It was unique in its structure and brevity. … It was a different approach and in some ways a troublesome one. … Think of Phase I like a balloon that was inflated over the past two years, but nobody tied a knot in the balloon. … This deal was aspirational.”
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That doesn’t make it wrong, Hart says. But it means there are few guarantees that China will continue to buy large quantities of US agricultural products. Now, he says, the Biden administration needs to decide on an approach for the future.
One clue may come soon. The administration has said it will release a formal Indo-Pacific framework soon. That could be an alternative to the Trans-Pacific Partnership that was negotiated during the Obama administration with a number of Pacific Rim nations but was never approved by Congress and that President Trump abandoned upon entering office.
Salmonsen says that the announcement should provide some clues to what approach the Biden administration will take on trade. He says the TPP would still be a preferable approach, but analysts will be watching to see what is included in the Indo-Pacific proposal.
It is likely the Biden administration will want to include environmental or labor issues in its trade policy, Salmonsen adds. It has been stressing climate issues in its first year.
No matter what the approach the Biden administration takes in the next three years, trade negotiations will happen and the United States will work to push its way into new markets and to eliminate trade barriers.
China will buy US agricultural products, Salmonsen says. China imports about $165 billion in agricultural commodities a year, and the United States had over $30 billion of that. The question is whether that will remain the case or whether China will jump in and out of the US market on the basis of price or some other issue. Meanwhile, the United States will continue to try to negotiate deals with other nations.
Back on the farm, Miller says he is glad that the era of trade wars with seemingly everyone is over, but he would like to see the Biden administration get more officials in place and put more of an emphasis on trade issues. He says while there is a chief trade negotiator, the administration has not yet appointed a chief ag negotiator or someone at USDA to lead that effort.
Salmonsen says the administration also has not yet pushed to renew trade promotion authority for the president.
Those issues will continue to be important, as will the overall idea of negotiating new trade deals.
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