The Foreign Agricultural Service (FAS) is an agency within the USDA that works to improve U.S. agricultural exports. The FAS monitors market developments, negotiates trade agreements, collects statistics, manages some agricultural aid programmes and establishes contacts with the community and international organisations. Green Box policies as defined in Annex 2 are domestic support programmes that have little or no impact on trade and can be used without restriction. To qualify for this category, policies must be funded by the government rather than charging consumers higher prices, and must not include price support. These programs often include research, infrastructure development, and direct payments to farmers who do not increase their production (also known as “decoupled payments”), such as: environmental payments or certain income supports. The current round of negotiations includes the review of direct payments to producers (paragraph 5), including decoupled income support (paragraph 6), and state financial support for income insurance and income protection schemes (paragraph 7), to name but a few. International agricultural trade has been described as inexplicable, boring and the most distorted segment of the global economy. Nevertheless, its importance is increasing as the agricultural market becomes more and more global.
The U.S. Department of Agriculture`s (USDA) Foreign Agricultural Service (FAS) reports that the U.S. is one of the world`s largest agricultural exporters, exporting 20 percent of the country`s agricultural production volume each year. International agricultural trade encompasses many different areas of international and domestic law, including international treaties and agreements, national trade laws and policy decisions. This overview focuses on these general concepts in the vast and complex field of international agricultural trade. U.S. trade policy decisions can have both protectionist and free trade characteristics. Protectionist measures in agriculture are often used to ensure that the country`s national food needs can be met, to protect producers from uncertainties in weather conditions and world market prices, and to promote rural development. On the other hand, free trade policy promotes the free movement of goods and services with certain countries, which can increase the amount of money available to producers. These policy decisions have a strong impact on international agricultural trade.
Subsidies affect commodity prices on the world market and policies can restrict or promote producers` access to other countries` export markets. Thus, the chatter about renegotiating trade deals has worried many people in American agriculture. The industry does not want to lose the profits of the last few decades. Much of the new administration`s discussion of trade has highlighted sectors of the economy where the U.S. arguably has no comparative advantage. However, as Secretary Perdue takes up his new role, he has underscored the importance of trade to U.S. agriculture by creating a new position within the USDA, the Under Secretary of State for Commerce. The question for agriculture in the future is how strong the USDA`s voice will be when new trade negotiations begin. Originally, gatt applied to the sale of goods, including agricultural products. However, many exceptions and exceptions for agriculture have made it possible to continue the protectionist policy in the agricultural sector.
As a result, international agricultural trade has been distorted by the use of policy instruments such as import quotas and export subsidies. The Association Agreement was created by the GATT Member States to reduce trade distortions in the agricultural sector. Since the beginning of that first trade deal, U.S. agricultural exports have grown from $30 billion to $135 billion today. Agricultural imports have also grown, but not as rapidly, from $20 billion in 1985 to $115 billion in 2016. To highlight the impact of free trade agreements, Figure 2 breaks down U.S. agricultural exports by partner (free trade agreements, China, and other non-free trade agreements). As the chart shows, much of the growth in U.S.
agricultural exports comes from our free trade partners, with Canada and Mexico accounting for a significant portion of that growth. Since 1985, U.S. agricultural exports with our FHA partners have achieved an average growth rate of 29%. Over the same period, our agricultural exports with non-FTA countries, including China, have achieved an average growth rate of 7%. China`s removal from the list of non-FTA countries slows the annual export growth rate to 5%. The United States has concluded trade agreements with individual countries and several countries in a region, in addition to comprehensive agreements resulting from WTO and GATT negotiations and NAFTA commitments. These agreements may be free trade agreements that eliminate tariff and non-tariff barriers to trade affecting trade between the parties to the agreement, or they may be agreements dealing with specific issues relating to products such as timber, poultry or rice. Thirdly, there are customs unions (CUs). A CU is a type of trading bloc that establishes a free trade area as well as a common external tariff for non-members.
Essentially, the participating countries will conclude a free trade agreement and apply a common external customs register to imports from third countries. The EU-Turkey customs union is an example of this type of trading bloc WTO members took important decisions on agriculture at the 2015 WTO Ministerial Conference in Nairobi, Kenya. These include the obligation to remove agricultural export subsidies, as well as decisions on public livestock for food security, a special protection mechanism for developing countries and trade rules for cotton. The WTO Agriculture Agreement provides a framework for long-term reform of agricultural trade and domestic policy with the aim of leading to fairer competition and a less distorted sector. In an effort to expand the world`s largest trade relationship, the United States and the European Union have agreed to begin negotiations on trade agreements. Trade between the two countries amounts to $1 trillion in goods and services per year and $3.7 trillion in direct investment in both directions. The US exported $12.7 billion worth of agricultural products to the EU in 2018, while the EU exported $23.7 billion worth of agricultural products to the US. On January 15, 2020, the United States signed a “Phase 1” trade agreement with China. As a result of this deal, China agreed to buy at least $80 billion of U.S.
agricultural products over the next two years, with at least $40 billion to buy each year. .