Post on 22-Aug-2020
transcript
Tariffs and Trade: Chaos Theory on a Global Level
Session Speakers
2
Julie Adams, ABC
Jason Hafemeister, USDA Special Trade Advisor
Cynthia Xing, Yuan Associates
TRADE & TARIFFS: CHAOS THEORY ON A GLOBAL LEVEL!
JULIE ADAMSJASON HAFEMEISTER
CYNTHIA XING
cha·os the·o·rynoun
…. complex systems whose behavior is highly sensitive to
slight changes in conditions, so that small alterations can give
rise to strikingly great consequences.
5
Asia-Pacific 41% Western Europe 38%
Middle East/Africa 13%
Central/Eastern Europe 2%
Canada/Mexico 5%
Latin America 1%
ALMOND EXPORTS BY REGION
741
231 196
128 110 81 72 69 67 61 57
Diversity of Shipments – Essential with a Changing Trade Environment
Million Pounds
Top Ten Export Destinations
6
China:
60% tariff on kernel/inshell U.S. almonds
20% tariff on preserved nuts (in cans)
40% tariff on processed or preserved
Japan:
“Partial” FTA
Import testing
E.U.:
Brexit
Import testing
Pesticide MRLs
India:35→41 rupees/kg on inshell
100→120 rupees/kg on kernels
Labeling
Grades/standards
Turkey:
25% tariff on U.S. Almonds
7
• Now the world’s 2nd largest economy
• Still #3 export market for CA almonds
– despite 25% reduced shipments
• A 60% tariff on kernel (0802.12) and
inshell (0802.11)
• Effective December 15(?), Prepared/
preserved 20%, 40%
• Impact of “phase one” agreement?
• Broader concerns: rule of law, internal
turbulence, NGO, social responsibility
China: Tariffs Impacting the Entire Supply Chain
Tariff Impact on Purchasing Chinese Food Imported from America
(Total Aware of Tariff n=845)
38%42%
15%
5%
48%
35%
12%
6%
56%
34%
8%
2%
49%
41%
9%
2%
25%
47%
21%
8%
Still buy at samefrequency as now
Still buy, but not as often Will only buy a smallamount
May not buy beforetariff is cancelled
July September November March October
8
A Few Thoughts…..
Can we get back to a “collaborative” approach to trade rather than an
“I win, you lose” philosophy?
How will our trading partners view U.S. commitments in the future?
What are the other emerging events that could impact global trade
challenges going forward?
December 9, 2019
Ag Trade Policy Overview
Jason HafemeisterSecretary’s Trade Counsel
United States Department of Agriculture
Foreign Agricultural Service
Top 6 Export Markets
Account for 60% of Total US Ag Exports
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020(f)
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Fiscal Year
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S. Korea
Mexico
EU
USDA Export Forecast 25 November 2019
China
Canada
United States Department of Agriculture
Foreign Agricultural Service
A Classic “long tail distribution”Almost 30 markets over $1 billion in Ag Exports
11Data Source: U.S. Census Bureau Trade Data
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U.S. Ag Exports 2018, Billion $
United States Department of Agriculture
Foreign Agricultural Service
We Want USMCA
12
Source: How U.S. Agriculture Will Fare Under USMCA and Retaliatory Tariffs.Farm Foundation. October 2018
United States Department of Agriculture
Foreign Agricultural Service13
U.S. Ag Exports to China
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Billion Dollars
WTO Accession
USDA/FAS/Bico Agricultural Products, calendar year
U.S. Exports to ChinaRetaliation Amplified on Agriculture
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
U.S. Exports to China: Commodities vs. Manufacturers(NAICS Categories, Trailing 12 Month Sums, % Change from End 2013)
All commodities Cars and Planes Manufacturing Exports (excluding Cars and Planes)
Source: U.S. Census Bureau/Haver AnalyticsNAICS Categories
Brad Setsercrf.org/blog/setser
United States Department of Agriculture
Foreign Agricultural Service
Key U.S. Ag Exports to Japan: 2018
152018 USDA/GATS/FATUS
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
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Feed Grains Beef Pork Soybeans Wheat,Unmilled
Vegetables& Prep
Fruits &Prep
Nuts &Prep
VarietyMeats
Dairy Prods
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rsSignificant Tariff Barriers
Top (#1) US Export Market
#2 US Export Market
United States Department of Agriculture
Foreign Agricultural Service
Key U.S. Ag Exports to Japan: 2018
16
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$ billion Top US Export Market#2 Export Market#3 Export Market Significant Tariff Barriers
Source: USDA, FAS, Global Agricultural Trade System (GATS), FATUS
United States Department of Agriculture
Foreign Agricultural Service
Japan Beef Tariff
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Japan's Import Tariffs on Beef (%)
WTO Bound (U.S.) WTO Applied (U.S.) Australia FTA TPP 11 (AUS, NZ, CA)
United States Department of Agriculture
Foreign Agricultural Service
Major U.S. Agricultural Exports to the EU
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* Odoriferous mixtures as ingredientsSource: USDA Global Agricultural Trade System (GATS) – BICO-HS-10
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United States Department of Agriculture
Foreign Agricultural Service
Major U.S. Agricultural Imports from the EU
* Processed; ** Enzymes as food ingredients; *** Fresh/Chilled/FrozenSource: USDA Global Agricultural Trade System (GATS) – BICO-HS-10
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United States Department of Agriculture
Foreign Agricultural Service
U.S. Agricultural Exports: Before and After FTAs and WTO Accessions
(Comparison average pre and post five years)
Source: USDA/FAS/GATS CY data
Notes: • Canada timeline is for US-Canada FTA. Mexico timeline is for NAFTA.• China is included for pre- and post- WTO accession comparison purposes.
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Pre 5 years Post 5 years
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United States Department of Agriculture
Foreign Agricultural Service
Trade and Public Opinion
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United States Department of Agriculture
Foreign Agricultural Service23
44
53 54
49
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41
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5758
72 74
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3835
41
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3534
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1992 1995 1998 2000 2003 2006 2008 2011 2014 2016 2019
What do you think foreign trade means for America? Do you see foreign trade more as – an opportunity for economic growth through increased U.S. exports or a threat to the economy from
foreign imports?
% - Opportunityfor economic growth
% - Threat to the economy
Trade and Public OpinionRecord High in U.S. See Implications of Trade as Positive for U.S.
Source: Gallup - “Slim Majority in U.S. See Trade as Benefiting American Workers” 3/21/2019
United States Department of Agriculture
Foreign Agricultural Service
Public Generally Positive about FTAs,
More Critical of Tariff Increases
24
China’s Perspective of Trade: Globalization
Cynthia Xing
December 10, 2019
Why Are US-China Trade Talks So Difficult?
• The US government’s focuses of trade negotiation kept shifting
• China was over-optimistic for the bilateral relationships at thebeginning, unprepared for evolved bilateral relationship in a new era
• More disagreements than consensus: long-lasting issues cannot besolved in months: IPR, National treatment, SOE reform
• Politicized negotiation vs. rising nationalism on both sides
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China’s Positioning and Strategy
• Positioning:
– Globalization: collaborative andmutuality
– US-China: problem-solving + protection
• Strategy:
– Internal stabilization
– Sustainability and Predictability
– Diversification (products and countries)
– US-China: Tariffs + Qualitivecountermeasures
China’s Stance and Efforts
Shifting Focus China’s Stance
1 Trade Balance China promotes import:• Reduced value-added tax (VAT) for imported commodities
Almond: 2018: 11%-10%; 2019: 10%-9%• China International Import Expo• Streamlined import inspection procedure
2 Policy and structure issues behind the trade unbalance
China has made concessions to the US, but in fact these actions are needed for China‘s own economic development: market access, IPR, industry policies, SOE reform, RMB exchange, agriculture and supervision mechanisms
3 Competition at global level Global supply chain and a competition for market share: “Made in China” to “Made byChina”
4 Enforcement Mechanisms:Mutual Trust
• US: removal of additional tariffs is the leverage for trade talk and subject to China’senforcement progressAlmond: 60% on kernel /inshell (2019.9.1); 20% on preserved nuts in cans and 40% onprocessed or preserved (2019.12.15)
• China: both sides should honor the principle agreement to roll back tariffs on each other’s goods in the same proportion and simultaneously in phases
20202018.9 2018.9-2019.6 2019.6 2019.6-12
China’s Attitude Towards Trade Talks
China: both sides should roll backtariffs in the same proportion andsimultaneously in phases
2018.3-9
China acted “reactively”;
“the ball is on the US side”
Trigger: US imposed additional tariffs onChinese products (subject to 232 and 301).
◆ China issued 1st White Paper, emphasizing US andChina are deeply complementary in terms of trade,hoping US to change course to resolve trade issues
Trigger: US increased from 10% to 25% on $200billion of Chinese products
◆ China issued 2nd White Paper, reiterating a) US should bearthe sole and entire responsibility for setbacks, b) China willnot give ground on issues of principle.
China stated that US should not hope toforce concessions by pressuring China
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China Perspective – A Single flower does not make Spring
Protectionism Globalization
What’s Next?
• New normal: piecemeal agreements inthe context of ongoing and inevitablefrictions
• China’s efforts to end the war – a moreopen attitude
• It is always about “win-win” partnershipto grow trade: mutuality
• ABC’s continued market promotion topave way for smooth trade in a globallevel, China included.
• Short-term:
➢ Tariff exemption in China
➢ China’s USD $ 40-50 billion purchase
• Medium to long-term:
➢ Elevate partnership with industryassociations
➢ Strengthen industry reputation fromnew perspectives: sustainability
➢ Diversify business mode and supply chains exporting to China: Cross-BorderE-Commerce (CBEC) , Processing in the FTZs
Conclusion Recommendation