U.S. TRADE OUTLOOK

On March 1 the Office of the United States Trade Representative (USTR) submitted President Biden’s 2021 Trade Agenda and 2020 Annual Report to Congress. In the agenda the Biden administration commits to trade policies that are "inclusive for all producers and will seek to expand global market opportunities." There is no doubt food and agriculture will be factors when the Biden administration proceeds with multilateral trade agreements and expected climate change policy.

However, it is yet to be determined what the U.S. trade agenda will mean for specialty foods. While the COVID-19 pandemic led to challenges worldwide for producers, food manufacturers, and distributors, premium foods and beverages have fared relatively well and in many cases remained untouched or had sales boosted in general. This is one of several indicators that the food industry is changing as consumers seek a broader variety of specialty and value-added products.

Overall demand for premium foods is growing worldwide and driven by increasing consumer focus on health and sustainability. This trend is particularly pronounced among younger generations with disposable incomes living in urban areas. Nielsen reports that 40% of Generation Z and 38% of Millennial respondents worldwide say sustainably is very important in their purchasing decisions especially for foods associated with reducing disease risk or fostering good health. These consumers are willing to pay a premium for sustainably-sourced ingredients compared to 21% of Baby Boomer respondents willing to do so according to Nielsen. In a host of different markets around the world, these young buyers will likely become significant drivers of long-term consumption of premium foods for years to come.

Because of the magnitude of this widespread trend, premium foods are important aspects to consider in U.S. trade negotiations as U.S. exports continue to expand beyond bulk products which comprise about a third of the total value of U.S. agricultural exports.

A critical aspect of championing premium food products as key outputs and components of U.S. trade is addressing market access issues. This should be a primary focus of upcoming negotiations so producers can capitalize on emerging markets and pivot as efficiently as they could with open access.

Two pending trade agreements for the premium food sector to continue to monitor are the U.S.-EU and the U.S.-UK trade agreements. The U.S. Trade Representative (USTR) announced its objectives for negotiations with the EU in 2019. Objectives include greater market access, changes to EU regulations and administration of tariff-rate quotas (TRQs), and addressing geographical indications (GIs). Food sustainability is an increasingly important factor in the EU as evidenced by the Farm to Fork Strategy which could have implications for trade. The EU27 is a leading agricultural export market for the United States.

The U.S. and the UK completed five rounds of trade negotiations in 2020. The UK market is very conducive to high-quality, premium products from the U.S. including specialty food products, fruit, nuts, and wine. While the UK alone is a relatively small market considering the whole of U.S. agricultural exports, it is the largest market in Europe for U.S. consumer-oriented food and beverage exports. The UK is considered a regional trendsetter for Europe in premium and specialty foods.

Prospects for these two agreements remain uncertain and, like other future trade negotiations, depend on the extension of the current law authorizing the Trade Promotion Authority (TPA) which expires on July 1. The TPA allows the President to enter into trade agreements subject to approval of Congress under expedited procedures and with no amendments. Without TPA Congress could amend trade agreements achieved by the administration which would likely extend the agreement implementation timeline.

As the new U.S. administration proceeds, trade is competing on a full agenda. It is important for the new administration to closely examine and evaluate U.S. current trade positions, but it is also critical that the U.S. moves forward on trade issues quickly to not miss out on opportunities for the premium food sector in the rapidly evolving global marketplace