Agricultural Exports and 2014 Farm Bill Programs: Background and Current Issues Page: 12 of 28
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Agricultural Exports and 2014 Farm Bill Programs: Background and Issues
U.S. trade policy and geopolitical events also factor into the level of agricultural exports. Trade
liberalization efforts aim to expand international commerce by lowering various barriers to trade
and broadening access to foreign markets. These efforts include multilateral agreements under the
auspices of the General Agreement on Tariffs and Trade (GATT) and its successor, the World
Trade Organization (WTO), as well as regional trade agreements such as NAFTA, and bilateral
free trade agreements, including the recent Korea-U.S. Free Trade Agreement (KORUS FTA).
Geopolitical events, such as economic sanctions, can influence the scope of trade in agricultural
products as well. The effects of sanctions are often temporary, as commodities are fungible and
trade flows tend to realign. One such event was the embargo that President Jimmy Carter imposed
on U.S. grain sales to the Soviet Union in January 1980 in response to the Soviet invasion of
Afghanistan in December 1979. At the time, the Soviet Union was the largest importer of U.S.
grain and feed. The quantity of U.S. grain and feed exports to the Soviet Union plunged by 66%
in 1980, but total exports of U.S. grain and feed that year climbed by 10% as other importers
absorbed the displaced grain.
More recently, on August 7, 2014, Russia banned the import of certain foods-including certain
beef, pork, poultry, fish, seafood, fruits, nuts, vegetables, sausages, and prepared foods-from a
number of Western countries, including the United States, in retaliation for economic sanctions
imposed on Russia for its actions in Ukraine. Banned food imports from the affected countries
amounted to 22% of the value of Russia's food imports in 2013. The U.S. share of the affected
product imports amounted to about 9% of the total but comprised only about 0.5% of annual U.S.
agricultural exports. In the wake of the ban, U.S. agricultural exports to Russia have fallen from a
total of 712,697 metric tons in 2013 to 565,652 metric tons in 2015. Shipments of poultry meat
and products have been severely affected, declining from 276,636 metric tons in 2013 prior to the
ban to zero in 2015.13
U.S.Agricultural Trade and the Trans-Pacific Partnership Agreement (TPP)
In February 2016, the Obama Administration signed the TPP, a proposed regional free trade agreement (FTA) with I I
other Pacific nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and
Vietnam. Importantly, the TPP will not have the force of law until it is ratified by the countries involved, which would
require enacting implementing legislation in the United States.'4
If implemented, TPP would be the largest regional FTA to which the United States is a party. In 2015, TPP countries
absorbed 43% of U.S. agricultural exports and supplied 51% of U.S. agricultural imports.
Among the five TPP countries with which the United States currently lacks an FTA-Brunei, Japan, Malaysia, New
Zealand, and Vietnam-Japan, Malaysia, and Vietnam have a combined population of roughly 250 million. Moreover,
each of these three countries imposes significantly higher average combined tariffs on agricultural products than does
the United States, suggesting the potential for U.S. agricultural products to make greater inroads into these markets
as a result of more favorable market access that would be provided under TPP.
Prominent among the market access provisions in the agreement are liberalized terms of trade in agricultural
products, including a reduction in tariff rates, which for many products would be lowered to zero. For example, the
agreement provides that Japan-the largest foreign market for U.S. beef-would lower its tariff on fresh, chilled, and
frozen beef from 38.5% currently to 27.5% once the agreement enters into force. Japan's tariff would then be
progressively lowered to 9% by year 16. In one of numerous other examples, Japan would eliminate seasonal tariffs on
oranges of 16% and 32% over six and eight years, respectively.
13 For more on Russia's import ban, see U.S. Trade Representative, The 2016 National Trade Estimate Report,
https://ustr.gov/sites/default/files/2016-NTE-Report-FINAL.pdf.
14 For additional background on the TPP agreement, see CRS Report R44278, The Trans-Pacific Partnership (TPP): In
Brief, by Ian F. Fergusson, Mark A. McMinimy, and Brock R. Williams. After two years from its signing in February
2016, TPP may enter into force if ratified by six countries accounting for 85% of the membership's GDP, which, in
practice, would require U.S. and Japanese participation.Congressional Research Service 8
Congressional Research Service
8
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McMinimy, Mark A. Agricultural Exports and 2014 Farm Bill Programs: Background and Current Issues, report, May 9, 2016; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc855851/m1/12/?q=%22trade%22: accessed May 3, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.