Grassley: U.S., Canada Could Soon Resolve Steel Tariffs

Posted on 05/14/2019 11:48 AM

Canada's Trudeau talks with VP Pence | Dr. Joe Glauber on next Trump tariff aid plan

Grassley: U.S., Canada could soon resolve steel tariffs. Sen. Chuck Grassley (R-Iowa) today in a call with reporters said he's hopeful U.S. and Canadian officials are working to conclude negotiations “based on the fact that it seems to me ... that they're talking. ... That's my understanding. And [there's] even the possibility of some face-to-face talks very soon. And maybe in 48 hours I'll have a more definitive answer for you.” Grassley said removing the duties, which Trump imposed on national security grounds, would clear a major hurdle in the effort to ratify the U.S.-Mexico-Canada Agreement (USMCA) in all three countries. He did not provide any update on the status of talks with Mexico.

— Canadian Prime Minister Justin Trudeau's office released a readout of a call he had with Vice President Mike Pence this morning. The two discussed steel and aluminum tariffs, USCMA, China and Venezuela, according to the statement (link).

President Trump called the trade dispute between the U.S. and China a "little squabble." Trump just told reporters: "We're having a little squabble with China because we've been treated very, very unfairly for many decades. I think it's going to turn out extremely well, we're in a strong position."

Former top USDA economist and noted trade policy expert Dr. Joe Glauber talks about WTO implications of a second round of Trump tariff aid. We asked Dr. Glauber, currently Senior Research Fellow at the International Food Policy Research Institute, about World Trade Organization (WTO) and other impacts of a likely second round of Trump tariff aid payments. Here was his response:

I have told a number of people that I thought that helping farmers through humanitarian aid was fraught with problems. One is that the mix of commodities is all wrong (feed grains and oilseeds versus food grains like wheat and rice). Moreover, it would be costly if you have to use U.S. bottoms to ship it. Thirdly, are the WTO implications. The US. fought hard in Geneva to eliminate export subsidies and finally succeeded in the 2015 Ministerial in Nairobi. How ironic that we now are contemplating dumping product to bolster prices in the name of humanitarian aid.

“Giving farmers aid through the MFP (Market Facilitation Program) raises issues as well. I think a number of countries were willing to look the other way last year when it was thought that the payments were a one-shot ad hoc effort to compensate farmers hurt in a trade war. Running such a program a second year in a row reminds me of the ad hoc assistance programs that paid producers double AMTA payments in the late 1990s. Yes, they were ad hoc, but after the second year, they began to take on the look of a “permanent” program. Those market loss assistance payments were a big part of the Brazil case against U.S. cotton subsidies.

“Lastly, there is the issue of whether the payments would cause the U.S. to go over their $19.1 billion bound level of allowed domestic support. Because so little of last year’s monies went to corn, corn amber box support (largely crop insurance subsidies) remained less than 5% of the value of corn production and thus was concerned de minimis and not counted in the overall support totals. If MFP payments for corn had been a little larger, they would have exceeded the de minimis threshold and all been counted towards the total. That plus soybeans plus other support would have made our totals much closer to the $19.1 billion. So, a lot depends on how the aid is structured. In the end, I would be more concerned about a WTO challenge to a particular commodity (like what Brazil did in cotton) but even there, one has to show that by virtue of the subsidies production decisions (and exports) were distorted.”

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