Expiring trade promotion authority is a problem for wheat trade
U.S. Wheat Associates Director of Trade Policy
Trade Promotion Authority is a key trade negotiation tool. TPA is due to expire in the U.S. in a month, posing serious challenges for ongoing negotiations important to wheat growers.
TPA is commonly called “fast track authority” because of its provisions to speed Congressional approval of trade agreements that were negotiated and agreed to by the administration of a sitting U.S. president. It has been granted to every presidential administration since Franklin D. Roosevelt and is, in effect, a tool to instill confidence in U.S. trading partners. It is crucial to advancing negotiations because under TPA, other countries would be less hesitant to make commitments in a negotiation fearing that a final agreement could be amended by the U.S. Congress.
While there is still time for Congress to extend TPA before the current expiration on July 1, 2021, there has been little discussion of renewal and the Biden Administration has not yet asked Congress to extend the authority. In reality, TPA has already expired because any newly negotiated free trade agreements (FTA) have a 90-day notification requirement. So even if a new agreement were notified today, it would eclipse the existing TPA authority by two months.
Before the current administration took office, the United States was negotiating free trade agreements with Kenya and the United Kingdom under TPA. Agreements with both countries present opportunities to expand U.S. wheat exports.
Buyers in the UK import mainly hard red spring (HRS) wheat from the U.S., due to prohibitive tariffs on medium and low-protein wheat and large domestic production of soft wheat. The U.S. supplies around 20% of the UK’s wheat imports. An FTA between the U.S. and the UK could give buyers greater access to additional U.S. wheat classes. After the UK officially left the European Union customs union at the start of 2021, it is now able to negotiate its own trade agreements. Due to the strong relationship and opportunity to increase wheat options for UK millers, an FTA between these two large economies should be a major priority.
Following the resolution last year of a sanitary/phytosanitary trade issue, there is more opportunity for U.S. wheat to enter the Kenyan market. Allowing favorable trade terms for U.S. wheat into this African country would make U.S. wheat more competitive with European and Black Sea wheat. An FTA with Kenya could serve as a model for future agreements with other African countries, which is important, as the continent is growing both in population and in food demands.
Almost all U.S. free trade agreements have been concluded with TPA in place. For example, the previous renewal of TPA enabled the renegotiation of the North American Free Trade Agreement, now known as the U.S.- Mexico- Canada Agreement and the U.S.- Japan Trade Agreement. Both agreements benefited wheat producers and their offshore customers significantly.
There has also been chatter among pro-trade folks in Washington about the potential of the United States rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Joining CPTTP would allow U.S. wheat level access to Vietnam in the Asian region and to any other country added to the bloc. Securing TPA would greatly encourage the idea of joining CPTTP and provide an effective consultation process with Congress and, eventually, a streamlined vote.
More than 50% of U.S. wheat production is exported every year so creating new market access, secured through free trade agreements, is critical to U.S. wheat competitiveness. USW highlighted the importance of TPA in comments to the United States International Trade Commission in 2020 and continues to support its renewal.
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