The United States expects Europe to follow through on a promise to buy more U.S. soybeans, said Agriculture Secretary Sonny Perdue on Monday. While Europe imports just one-sixth as many soybeans as China, larger purchases would “replace some of the volume lost” in the tit-for-tat tariff war, Perdue said. At the same time, he said that America will not respect EU claims to the exclusive use of such food names as Parma ham or Roquefort cheese.
Economist David Widmar said important details — chief among them, payment rates — are missing from the administration’s plan to provide up to $12 billion in aid to the agriculture sector to blunt the impact of the Trump tariffs. Soybeans and pork are the two hardest-hit commodities, according to USDA data. The price outlook for both is weaker because of retaliatory tariffs imposed by major U.S. trading partners. Soybean exports are forecast to shrink by 11 percent in the year ahead.
Shares in Tyson Foods, the largest U.S. meat processor, fell by 7 percent to a one-year low on Monday after the company said the trade war would sharply reduce its expected earnings, reported CNBC. “Changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment,” said Tyson chief executive Tom Hayes. One-fourth of U.S. pork is exported. Both China and Mexico, the two largest markets, have levied duties on the meat.
“Until the direct payment calculations are revealed, producers will have no idea how the aid will impact their farm,” wrote Widmar at the Agricultural Economic Insights blog. “While we don’t know how much the USDA will pay for each commodity, it’s worth pointing out how fast a few billion dollars can go when trying to limit the impacts of a trade war.”
“I made an emphasis they need to step up and buy,” said Perdue in describing, during a teleconference, his conversations with European counterparts during a weekend meeting of ag ministers in Argentina. European Commission president Jean-Claude Juncker said last week that Europe would import more U.S. soybeans. Analysts said such purchases could be expected because Brazilian soybeans cost more and U.S. soybeans cost less since the trade war began. European Commission sources told AgriCensus, the market news agency, that imports of U.S. soybeans would be based on EU needs and on market factors.
Perdue invoked U.S. market power as the world’s largest economy on two other trade issues. First, he said, the United States will insist that agriculture be included in the trade talks Juncker and President Trump announced as part of a truce on tariffs. European officials say the talks will cover industrial products and not agriculture. A Financial Times columnist wrote, “Agriculture was excluded because it would have invited immediate French opposition.”
U.S. trade representative Robert Lighthizer “definitely plans to make agriculture a topic in these discussions going forward,” said Perdue.
The EU and the United States have fought for years over genetically modified crops, beef raised with the use of artificial hormones, and “geographical indications,” which tie food names to specific places. All are concerning to U.S. producers. The dairy industry, for instance, fears that a trade pact with the EU could mean that many commonly used names, such as cheddar or parmesan cheese, will no longer be available to them.
When it comes to geographical indications, Perdue said, “Countries that want to trade with us better be careful” about accepting EU terminology. “It is not acceptable. We don’t intend to comply with that.”
The EU has reached agreements or completed trade pacts with Canada, Japan, and Mexico recently, which could spread the use of its food terminology.