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U.S. Imposes Tariffs, Canada Retaliates

 
The Trump Administration has placed tariffs on certain types of aluminum from Canada. This decision comes about a month after the implementation of the U.S.-Mexico-Canada Agreement. Canadian Deputy Prime Minister Chrystia Freeland said the tariffs are “unwarranted and unacceptable.” The Canadian government plans to impose $3.6 billion in retaliatory tariffs against the U.S. Over the next 30 days, the country will determine what U.S. products will face the tariffs. There are no agriculture commodities on the preliminary list. Agricultural interests are monitoring this skirmish for possible trade retaliation.

USMCA Enters into Full Force

On July 1, the United States-Mexico-Canada Agreement (USMCA) entered into force, replacing the decades-old NAFTA. USMCA was signed into law by President Donald J. Trump on January 29 after it received overwhelming bipartisan support in Congress. USMCA advances U.S. agricultural interests in two of the most important markets for American farmers, ranchers, and agribusinesses.
 
Key provisions in USMCA for the dry bean industry include:
  • Sanitary/Phytosanitary Measures: The three countries agree to strengthen disciplines for science-based measures that protect human, animal, and plant health while improving the flow of trade.
  • Biotechnology: For the first time, the agreement specifically addresses agricultural biotechnology – including new technologies such as gene editing – to support innovation and reduce trade-distorting policies.
This high-standard agreement builds upon existing markets to expand U.S. food and agricultural exports and support food processing and rural jobs. Canada and Mexico are the first and second largest export markets for U.S. food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018. These exports support more than 325,000 American jobs.

Global Uptick in Pesticide/Herbicide Restrictions Could Disrupt Trade

The U.S. Dry Bean Council (USDBC) is keeping a close eye on the changing regulatory environment governing the import of different pesticide/herbicide products. This is an issue that has been brewing for some time but recent health concerns are increasingly translating into import bans on the products themselves and the announcement or notification of intent to lower tolerances or maximum residue levels (MRLs) on imported agricultural products. So far Mexico, Thailand, Vietnam, China and the European Union have all announced varying degrees of intent to revisit tolerance levels. This includes precautionary principles (Mexico), future intentions as part of a new Green Deal (EU), and actual notifications to the WTO (China), which is the last step in making a new tolerance level official.
 
The USDBC has long encouraged that countries follow harmonized MRLs as set by Codex but that no longer seems to be an acceptable standard in many of our export markets. Before a notification is made to the WTO and becomes final, the U.S. agricultural community always has the chance to submit commentary but this may or may not alter the course of the intention to lower an MRL. While not all of these affect the U.S. dry bean industry, this is generally a concerning trend as it moves away from harmonization and Codex and could be disruptive to trade. Right now, the USDBC is in an information gathering stage at this point and is planning a new research and advocacy initiative focused on global MRLs for late 2020/21. 

USDBC Response to COVID-19

The U.S. Dry Bean Council is up and fully operational during this challenging time for the country and for the entire world. All global events are canceled through the end of May and possibly longer, as the USDBC reevaluates in accordance with global standards and recommendations.
 
U.S. and global staff are all working full time from home offices and keeping global programs running. Programming will be moving to digital platforms in the very near future to make up for the current inability to conduct site visits and in-person trade servicing.
 
As agriculture is considered a critical industry, farmers are working full steam ahead to prepare for dry bean planting and to allow the industry to continue to meet U.S. and global demand without interruption. The USDBC will be communicating more frequently through all social media and digital means.

Dry Bean Marketing Opportunities in Chile

The U.S. Dry Bean Council conducted a market scoping trip to Chile in December 2019 to study recent increases in dry bean imports and new opportunities for the U.S. Interviews with the Chilean dry bean industry as well as official production statistics confirm that domestic dry bean production is half of what it was a decade ago and will not recover since farmers shifted from dry beans to other crops that have higher profit margins, particularly fruits and vegetables.

While Chile used to be an important exporter in the region, it now exports fewer than 2,000 MT of domestic beans a year. Chilean importers are interested in establishing direct relationships with US suppliers and learning more about US dry beans – including quality, phytosanitary measures, varieties, and availability.

Domestic demand is around 30,000 MT with Chile producing about half that amount. The top suppliers are currently Argentina (due to proximity and familiarity) and Canada (largely due to relationships that started with the lentil trade). There is greatest potential for Pintos, Great Northern beans, followed by DRKBs (especially for canning or quality packaging), Black beans (depending on Argentina’s supply and price) and possibly small red beans.
In addition to a dozen packaged brands (both manufacturer brands and supermarket private label), prepared foods are an important market segment and there is growing demand for healthy, non-allergenic, organic and plant-based foods. Prepared beans in Tetrapaks and cans take up the same amount of space in supermarkets as packaged beans. We feel there is potential to establish new export streams of U.S. origin dry beans to Chile and will continue to work on this throughout 2020. Full scoping report is available on the USDBC members only webpage.
 

Bean vendor in the central market in Santiago

(Source: U.S. Dry Bean Council)

Dry Bean Trade Policy Update

 
With so much going on in the world of trade policy for dry beans, the U.S. Dry Bean Council has provided a update:
 
China Phase One Agreement
A 5% reduction on dry bean retaliatory import duties to 38%, still not at levels previous to the ongoing trade dispute. We have also learned that Chinese importers can apply for an exemption to bring in U.S. dry beans at previous applied tariff rates.
 
US/UK Trade
Discussions continue on prospects for a US/UK trade agreement as the UK continues to define the terms of its trade regime during the transition Brexit year through the end of 2020. The UK government is holding a consultation period on its MFN tariff levels once Brexit is complete in 2021, this is open to comments through March 5, 2020.
 
US/EU Trade
There is renewed vigor to engage in trade discussions with the EU. Negotiations are starting up again behind the scenes while ongoing retaliatory tariffs remain in place.
 
CAFTA/DR
The CAFTA/DR trade agreement has reached full implementation for US Dry Beans. This means that all U.S. origin dry beans enter the Dominican Republic duty free with no limits on tonnage via TRQs. In many ways this opens the market to more bean imports from the U.S but it is also creating some roadblocks. We are addressing these with both the U.S. and DR governments to ensure full market access.

The Impact of Coronavirus on Dry Bean Programming

The primary concern with the outbreak of the coronavirus (CORVID-19) is the health and well being of U.S. Dry Bean Council staff and industry members. New travel and event restrictions are still being announced, with the greatest impact on China and other parts of Asia. Because China is such a large trading partner, the economic and health impacts of the virus are being felt around the world. Logistical slowdowns from some countries are reported on shipments of various goods into China and vice versa. No major developments have been identified on other shipments of food and agricultural commodities by USDBC representatives.
 
Food and Hotel Asia (Singapore), the largest international food show in Southeast Asia, originally scheduled for late March/early April has been postponed until July. However, Thaifex-ANUGA Asia 2020 in Bangkok remains on-track for May 28 – June 1. At ANUFOOD 2020, which is scheduled for March 9 – 11 in Sao Paulo, Brazil, large areas that are reserved for the Chinese delegation will be empty. No one is attending from China and the organizers are not allowing others to take that space. China is Brazil’s largest trading partner. Read more.

Phase One Trade Agreement Implementation Moving Forward

Following concerns that China may not follow through with the phase one trade deal, USDA says China has taken numerous actions to implement commitments to the U.S. In a statement, Agriculture Secretary Sonny Perdue says the Trump administration negotiated a strong trade agreement with China and there are expectations with compliance on all elements of the deal. The phase one trade deal agreement went into effect in mid-February. Read the press release.

Dry Bean Scene

Speaking at an agriculture convention this week, Agriculture Secretary Sonny Perdue outlined the trade needs between the U.S. and Europe. Get the details in the Dry Bean Scene on the Red River Farm Network, made possible by the Northarvest Bean Growers Association.

Dry Bean Scene

On Wednesday, President Donald Trump signed the U.S.-Mexico-Canada Agreement. This action is receiving praise from the dry bean industry. Learn more in this week’s Dry Bean Scene, made possible by the Northarvest Bean Growers Association.