WASHINGTON — The Trump administration achieved some notable trade successes in 2019, first among which was the negotiation of the U.S.-Mexico-Canada Agreement to modernize and replace the 26-year-old North American Free Trade Agreement. At the same time, in other instances, success on the trade front was more qualified. In the case of the trade war with China, the agreement reached in December was more a ceasefire than a peace treaty with the most vexing differences between the United States and China yet to be fully addressed much less resolved.
Securing the support of the House of Representatives for the U.S.M.C.A. was a major challenge faced by U.S. trade negotiators in late 2019, and they succeeded in this by working with House Democrats and organized Labor to include provisions in a revised U.S.M.C.A. that the progressives could support. The U.S.M.C.A. with the revisions was approved by Canada and Mexico and was passed by the House on Dec. 19 by an overwhelming 385-to-47 vote.
The Senate was expected to approve the U.S.M.C.A. in January and pass it along to President Donald Trump for his signature.
The food and agriculture industries were staunch supporters of the U.S.M.C.A. Under the agreement, all food and agricultural products that have zero tariffs under NAFTA will remain at zero tariffs. Additionally, the agreement creates increased access for American producers to the Canadian market for dairy, poultry and eggs, and eliminates certain aspects of the current Canadian wheat-grading system that discriminated against U.S. wheat transported across the border to Canadian grain elevators. The U.S.M.C.A. also specifically addresses agricultural biotechnology, including new technologies such as gene editing, to support innovation and reduce trade-distorting policies.
China outlook remains uncertain
After nearly 21 months of trade war between the United States and China comprising tit-for-tat ratcheting up of tariff barriers to each other’s products, Mr. Trump on Dec. 13 announced a phase one trade deal had been reached. The announcement came just two days before the United States was to implement a new round of tariff hikes, this time on about $156 billon worth of Chinese manufactured consumer goods.
While details weren’t expected to be released until the agreement is signed by Mr. Trump and Chinese officials (Mr. Trump said a signing ceremony was planned for Jan. 15 in the White House), U.S. negotiators indicated in addition to canceling the scheduled tariff hikes, the United States agreed to halve tariff increases on $120 billion worth of Chinese goods imposed in September to 7.5% from 15%. But other U.S. trade war tariffs on most Chinese products will remain in place.
In exchange, China’s chief promises were to sharply increase imports of U.S. food and agricultural products and provide better protection for U.S. intellectual property rights. U.S. trade officials said China agreed to purchase about $40 billion in farm and food products from the United States annually. The highest value reached by U.S. farm exports to China before the trade war was about $27 billion.
Terms of the agreement that might detail just how much U.S. food and agricultural products China will commit to purchase, and a breakdown by commodity, were eagerly awaited. There was considerable skepticism in the food and agriculture community about whether China will purchase what U.S. trade officials said it will. Indications were the Trump administration was prepared to resume the tariff war in the event China fails to meet its purchase commitments.
The United States in 2019 also entered into trade agreements with Japan and Brazil. With the U.S.-Japan Trade Agreement, the Trump administration had sought an agreement in large part to ensure U.S. farm and ranch products receive the same terms of trade and access to the Japanese market accorded by Japan to its fellow members of the Comprehensive and Progressive Trans-Pacific Partnership, including Australia and Canada. Mr. Trump in his first days in office withdrew the United States from the Trans-Pacific Partnership, which became the C.P.T.P.P., which necessitated the approach to Japan.
The United States succeeded in persuading Brazil to implement annually its duty-free tariff rate quota (T.R.Q.) of 750,000 tonnes of wheat to which it agreed when acceding to the W.T.O. in 1994. Brazil is the fourth-largest wheat importer in the world. It imports wheat duty-free from its MERCOSUR trading bloc partners, especially Argentina, while tariffs on wheat from other origins, including the United States, typically are set at 10%. Under the Brazil-U.S. agreement, Brazil committed to implement its W.T.O. duty-free T.R.Q. for 750,000 tonnes of wheat each year, which will enable U.S. producers and exporters to compete for a share of at least that business.