May 16, 2018 Gary C. Martin, President and CEO Work rking ing Tog - - PowerPoint PPT Presentation

• St. Lawrence Seaway Development Corporation

May 16, 2018

Work rking ing Tog

• gether

ther to Mak ake e Trade ade Work rk

Gary C. Martin, President and CEO Ryan Olson, Director of Operations

International Grain Trade Coalition (IGTC) Katy Lee Secretariat

National Grain and Feed Association

1,000 + NGFA Member Companies:  Grain elevators  Feed, feed ingredient manufacturers  Oilseed processors  Flour, corn mills  Biofuels producers  Many other related agribusinesses  26 State/Regional Associations  Partnerships with NAEGA, PFI Mission:  Secure abundant, safe food and feed supply  Promote free markets

• St. Lawrence Seaway Volume

China Trade Developments

World’s Bulk Grain Systems

The grain industry’s challenge = move commodities from areas of surplus to areas of deficit, provide for regulatory compliance , safety and cost efficiency ✓ Movement is bulk and comingled.

✓ 3-36 months contract to delivery lead time ✓ Characterized by high volumes, low cost ✓ Adventitious materials may occur in all shipments of all commodities. ✓ Regional , Hemispheric as well as national trade flow patterns are accommodated.

Pressure has never been greater on agriculture to provide for global food security, food defense and energy security while maintaining high quality, safe products throughout the value chain. The role of international trade in agri-bulks is expanding and increasingly complex and in need

• f market access with sound, responsible,

predictable commercial and official relationships

Global Supply through Trade

Global Supply through Trade

KEY INTERNATIONAL OBJECTIVES

9

• System Integrity, Predictability, and Reliability
• Consistent and notified requirements that enable markets to

trade products and provide for proportionate and effective risk mitigation and management.

• Appropriate measures that allow grain systems to maximize the

value of the grain product and minimize cost inefficiencies and handling costs associated with the supply chain, while meeting plant protection needs.

• FINAL at LOAD Port is BEST and NECESSARY. Must Maintain and

Defend the US as the Gold Standard

Delivery Terms and Transfer of Risks

FAS Free along side ship FOB Free on board CIF Cost Ins. freight CFR Cost and freight Ex SHIP Type of contract Ownership of goods: Seller Buyer Assumer of risks: Seller Buyer Assumer of costs: Seller Buyer

Seller Domestic transport Domestic cargo terminal Domestic customs International transport Foreign reception Foreign customs Buyer Foreign cargo terminal

End of Loading Spout Risk transfers to buyer

Fungibility

A good or asset's interchangeability with other individual goods/assets of the same type. Simplifies the exchange/trade process, as interchangeability assumes that everyone values all goods of that class as the same

• In the supply and use of grain, fungibility

refers to grain in the system being adequately interchangeable to provide for sustainable supply and price discovery – Hence to a degree functionally the same

• Example: No.2 Corn does not matter where

Corn was grown or where it is delivered - worth the same amount.

Fungibility

• Farmers have widely embraced

growing a generic product, with clear specifications.

• For those who originate and handle

grain fungibility has been a key attribute to enable efficient supply chains.

• For both domestic and international

customers have access to a safe, low cost and predictable food supply chain.

A goal: ENABLE Fungibility

One barge can carry:

• 1,500 tons
• 52,500 bushels
• 453,600 gallons

One 15-barge tow can carry:

• 22,500 tons
• 787,500 bushels
• 6,804,000 gallons

One jumbo hopper car can carry:

• 100 tons
• 3,500 bushels
• 30,240 gallons

One 100-car train can carry:

• 10,000 tons
• 350,000 bushels
• 3,024,000 gallons

One large semi truck can carry:

• 26 tons
• 910 bushels
• 7,885 gallons

Cargo capacity comparisons

Equivalent units

One barge 15 jumbo hoppers 58 large semi trucks One 15-barge tow 2.25 100-car trains

58 870

870 large semi trucks

1 panamax (50,000 tons) = 38 barges = 2,200 semi trucks = 2 million bushels = 330 trillion soybeans

Regulatory Cooperation and Coordination

Provide for the use of the most trade enabling and least trade distortive measures, while improving trade and official by addressing regulatory: a.Pre-Export Actions b.Actions at Import c.Science and Risk Analysis d.Audit and Transparency

Regulatory Cooperation and Coordination

Requirements / Regulations play critical role

International Maritime Law (IMO) Insurance Banking Terms Sale of Goods Convention Food Safety (Codex)

U.S. (NGFA) Commercial Practices and Code Trade Rules – Rail and Grain Trade Occupational Health and Safety Environmental Protection Homeland Security GMO regulation/ commercialization Food, Feed Safety (US FDA) Product Quality Industry Education and Training Economic and Tax Policy Contract Guidance and Dispute Resolution International (NAEGA) Plant Health (IPPC) Maritime Law (IMO) Insurance and Finance Terms Food Safety (Codex) Biosafety / Crop Biotechnology (BSP) Sustainability Mandates Security (ISPS) Digital Documentation and Verification Trade Barriers and Sanctions (WTO) Contract Guidance and Dispute Resolution

Compliance, Co-ordination and Support for Actions of Governments

International Collaboration with USG

NAEGA Works with the Following U.S. Government Agencies & Departments: ➢ FAS – NAEGA Consults with FAS on a wide range of issues, and we utilize Market Access Program funds primarily for international travel. ➢ AMS, FGIS and APHIS –Regional Seminars, Inter-market Survey ➢ U.S. Coast Guard –Alternate Security Program (ASP), IMO, ISPS code. ➢ FAS Cooperators – USGC, USW, USSEC ➢ FDA, EPA, Commerce, State

Aim: to achieve a market and regulatory environment supportive of trade that avoids disruptions in the international trade of grain,

• ilseeds, pulses and derived products.

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International Grain Trade Coalition (IGTC)

www.igtcglobal.org

Katy Lee, Secretariat, IGTC (Geneva)

CGC NAEGA, NCGA, NGFA, USGC, USW, CRA, USSEC

,

ANIAME, APPAMEX COCERAL GAFTA Eastern Africa Grain Council CIARA-CEC GTA, AGEA CNFA, CNAGS, CGBA SOPA, SEA CAPECO

Geneva, Switzerland

ANEC RGU SACOTA

26 associations, 8000 businesses 85 countries

UGA

Features of the global grain trade

➢ Well developed and highly globalised ➢ Large, growing and increasingly complex ➢ Utilises sophisticated infrastructure and processes to provide safe, cost effective, reliable supply ➢ Moves product in high volumes with interchangeability of commodity, transportation, handling and infrastructure ➢ Constant improvement and innovation

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• UN FAO (194 governments)
• IPPC (183 governments)
• World Customs Organization

(180 governments)

• World Trade Organization (162

governments)

• International Grains Council (55

governments)

• Global Low Level Presence

Initiative (15 governments)

IGTC’s work with international partners

Policy opportunities 2018

• 1. Crop protection product approvals & residue

measures

• 2. Plant Breeding Innovation
• 3. Low Level Presence
• 4. Cartagena Biosafety Protocol
• 5. Harmonisation of phytosanitary control methods

UN International Plant Protection Convention (IPPC)

• 6. Innovation in electronic trading documentation

IGTC survey – MRLs, 2018

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Grain deemed unacceptable at destination market - breakdown of data by region (41 reports) Asia - East Asia – South East Europe Near/Middle East South America

Commercial Practice and Trade Policy

Ryan Olson, Director of Operations, NAEGA

Western Inspection

• 7. Quality

Quality and condition to be final at port of loading in accordance with official inspection certificates and/or other certificates as may be required in this contract. In case of delivery at St. Lawrence ports, quality and condition to be final in accordance with Lake and/or loading ports official inspection certificates; Lake inspection certificates to be properly identified at ports of loading. Each party hereby authorizes the other party to request in both parties' names an appeal inspection under the U.S. Grain Standards Act, if applicable, or as may be required in this contract at any time prior to or during the loading of the vessel, and whether or not such request was filed before commencement of loading. The cost of such appeal inspection, unless otherwise stipulated in this contract, shall be borne by the party requesting it. The commodity is not warranted free from defect, rendering same unmerchantable, which would not be apparent on reasonable examination, any statute or rule of law to the contrary notwithstanding.

• 17. U.S./Canadian Government Rules and Regulations

Buyer and seller agree to comply with the U.S. and/or Canadian regulatory requirements applicable to this contract, including, but not limited to, those governing any export subsidy, destination controls, government financing of agricultural commodities and the monitoring of export purchases and sales. Any losses, fines, penalties, expenses, costs

• r damages incurred as a result of failure to perform in accordance with

this provision shall be borne by the party responsible for such failure.

Compliance with U.S. and Canadian Law

NAFTA Time Crunch

Sources: Trade Benefits America Coalition, “Timeline and Requirements for Trade Agreements Under TPA-2015 Legislation”; Ian F. Fergusson and Richard S. Beth, “Trade Promotion Authority (TPA): Frequently Asked Questions,” Congressional Research Service, July 2, 2015; Jackie Calmes, “Trans- Pacific Partnership Text Released, Waving Green Flag for Debate,” New York Times, November 5, 2015

NAFTA Timeline Under Trade Promotion Authority

Agreement signed

30 days prior to negotiations Publish negotiation objectives and description of how agreement will benefit US on USTR website 105 days after agreement ITC assessment

• f trade

agreement due 180 days prior to agreement Submit report to Ways and Means and Finance on potential changes to US trade remedy laws 90 days prior to agreement Notify Congress of intent to enter into agreement; Give ITC agreement details 60 days prior to agreement Publish full text of agreement on USTR website 30 days prior to submission Submit final legal text of agreement No deadline Submit environmental review, employment impact review, and implementation plan

Negotiations begin

60 days after agreement Describe changes to US law required to comply with agreement 90 days prior to negotiations President submits written notice of intent to begin negotiations

Agreement introduced in Congress

Where we are now

90 days after the introduction in Congress Maximum time agreement can spend in session. The House has 60 days to vote; the Senate must then vote in the following 30 days

China Trade Developments

President Trump directs the Department of Commerce to investigate whether imports

• f steel from China and
• ther countries pose a threat

to U.S. national security Trump initiates a second investigation into Chinese trade practices. He asks to USTR to examine unfair Chinese trade practices, focusing on theft of U.S. intellectual property The U.S. announces a 30% tariff on imported solar panels and taxes large residential washing machines staring at 30%. Both goods in the American market largely come from China Under Secretary Wilbur Ross, the Commerce Department recommends a range of tariffs, including 24% on steel and 7.78% on aluminum, citing national security concerns April 2017 August 2017 January 2018 February 2018

Timeline of events

April 3, 2018: The U.S. threatens to target $50 billion in Chinese goods, heightening the tension between the two countries. The tariffs were introduced less than 24 hours after China’s announced tariffs, in response to the August 2017 I.P. theft case according to the USTR March 9, 2018: Trump imposes tariffs on steel imports, following through on the recommendation delivered by the Commerce Department. Steel imports are taxed at 25% and aluminum at 10%, but key allies are exempted April 2, 2018: China imposes tariffs on US imports worth $3 billion in direct response to the U.S. tariffs on steel an aluminum April 4, 2018: China threatens to target $50 billion in American goods, responding the U.S. threat in full

• measure. Global markets have reacted negatively to the announcement

April 5, 2018: Trump calls for a new wave of tariffs targeting $100 billion of Chinese goods, asking USTR Lighthizer to look into which products to target Potential actions

• A public comment period is ongoing until May 11 for

the $50 billion in U.S. tariffs on Chinese goods announced April 3. A hearing on the tariffs is set for May 15

• China has yet to announce official dates for when

$50 billion worth of tariffs will go into effect on U.S. imports to China

• China and the U.S. will likely begin negotiations over
• tariffs. Trump’s main objective is to reduce the U.S.

trade deficit with China

NAEGA Priorities for Official Relationships

• Maintaining and expanding market access, tariff concessions and other provisions that have

enabled economic integration.

• Improving regulatory coherence and cooperation by implementing enhanced science based

sanitary and phytosanitary rules, such as a rapid-response mechanism that commits trading partners to swiftly notify and resolve SPS issues.

• Strengthening efforts to address technical barriers to trade to prevent non-tariff barriers that lack

scientific merit.

• Increasing transparency and cooperation on activities related to modern agricultural production

technologies, including seed-breeding innovations.

• Aligning standards, including product and ingredient registration, fortification and certification

requirements.

• Enabling innovation of information technologies to improve logistics and regulatory

implementation.

NAEGA Priorities for Trade Policy

Thank You!

Contact: Ryan Olson Email: rolson@naega.org Phone: 202-682-4030 Website: naega.org Contact: Gary C. Martin Email: gcmartin@naega.org Phone: 202-682-4030 Website: naega.org Contact: Katy Lee Email: secretariat@igtcglobal.org Phone: +41 789 329 618 Website: igtcglobal.org

Thank You!