Export uncertainties: Recent changes in trade policy cause worry

By Jennifer L. Drey

Washington’s agricultural exports increased significantly in 2017, but uncertainty surrounding U.S. trade policy has some producers worried the state may be on the verge of losing its competitive edge overseas.

Although the numbers are still being finalized, Washington’s agricultural exports appear to have increased by at least 10 percent in 2017. The increase adds to the $6.8 billion of Washington-produced agricultural goods exported in 2016, said Rianne Perry, international marketing manager for the state Department of Agriculture.

Double-digit increases were seen in cherries, which were up 18 percent year over year; hops, where export numbers jumped by 20 percent; and beef, which increased by nearly 50 percent.

“Things are looking really good with exports,” Perry said.

Long-term trading partners Canada and Japan were the top two destinations for Washington’s agricultural exports, but Washington exports to China also increased significantly, with year-over-year growth of about 30 percent. The number of cherries exported to China grew by almost 75 percent.

“China is just growing so significantly,” Perry said. “The middle class is growing and consumers are able to spend more on our products.”

About two-thirds of Washington’s agricultural exports are destined for Asia, in part because its proximity means that ships can arrive at key ports up to two days sooner than those coming from other areas. After China, the next three destinations for Washington exports were the Philippines, South Korea and Taiwan, coming in fourth, fifth and sixth places, respectively.

In total, $14.5 billion of goods were exported through Washington’s ports in 2016, a figure that includes $7.7 billion of exports coming from other states.

As the third-largest exporter in the country, behind California and Louisiana, Washington has a complex but well-designed system to support its agricultural exports. Key to that system is the Northwest Seaport Alliance, or NWSA, which manages the marine cargo business and facilities for the ports of Seattle and Tacoma. The operating partnership between the two ports is the first of its kind in North America.

In support of agricultural exports, NWSA has more than 40 companies offering cold storage and refrigerated cargo-handling services near the ports, which includes more than 2.3 million square feet of temperature-controlled warehouse space, according to Tara Mattina, communications director for NWSA.

The international container terminals have about 5,200 plugs for refrigerated containers and more are on the way, she said.

The fourth-largest container gateway in North America, NWSA invests in projects that will support Washington’s export market. The alliance is working on upgrades to handle larger ships being introduced into the marketplace. Two key container terminals, the Husky Terminal in Tacoma and Terminal 5 in Seattle, are undergoing improvements. The Husky Terminal is a bit ahead with $250 million in improvements, which includes eight new cranes, Mattina said.

Despite the state’s many strengths in the ag export market, some growers and industry representatives are concerned about recent changes in U.S. trade policy. The country’s formal exit from the Trans-Pacific Partnership, or TPP, is chief among those concerns. Eleven other Pacific-touching countries, including Canada and Japan, are proceeding with a new trade agreement to lessen tariffs for member countries over the nine-year period of its implementation, in turn making U.S. products more expensive by comparison.

“We will begin to start seeing more disadvantages to us on price versus our competitors who are in the TPP because they’ll have no tariffs on their products; whereas, our products will be more expensive,” Perry said.

In the absence of being a part of the TPP, bilateral agreements—or one-on-one agreements between the U.S. and each of the member countries—will be an absolute necessity for strengthening the U.S. trading position, she said. Separate agreements will need to be written, a process that will take time.

As farmers wait for clarity on trade policy in the Pacific, renegotiations of the North American Free Trade Agreement, or NAFTA, have taken front and center, adding additional uncertainty for those in the export market, Perry noted. NAFTA is the agreement that regulates trade between the U.S., Canada and Mexico.

The concern in both cases is that competitors from foreign markets will be quick to fill any void left by the U.S.

“With NAFTA renegotiations and the TPP, trading partners that we’ve had stability with and that we’ve had long-term relationships with are starting to look elsewhere and explore other options,” Perry said. “They’re negotiating free-trade agreements with our competitors.”

The European Union, for instance, is already negotiating free trade agreements with Japan and Mexico. That’s particularly concerning to the potato industry, where 70 percent of what’s grown in Washington is exported out, mostly to the Pacific Rim, said  Chris Voigt, executive director of the Washington Potato Commission.

Japan, which is the biggest market for Washington potato products, has indicated the country isn’t interested in forming bilateral agreements with the U.S., he said.

“(Potato growers) are definitely concerned. This is their livelihood,” Voigt said.

Washington has a tremendous amount of infrastructure to support potato growers, such as processing and storage facilities that can’t be used for anything else, he said.

“If exports go away, it would be devastating to our industry. Everybody is definitely nervous,” Voigt said.

Representatives from the wheat industry also expressed concern. Nearly 90 percent of wheat grown in Washington is exported, much of it to Asia, which has a strong preference for soft white wheat grown in Washington state

Of the 6 million metric tons of wheat imported by Japan each year, more than 3 million metric tons are imported from the U.S. That long-held 50-percent U.S. market share in Japan is expected to drop to 23 percent following implementation of TPP-11.

“We’re really concerned about trade right now,” said Michelle Hennings, executive director of the Washington Association of Wheat Growers.

Her organization is hopeful the U.S. will reconsider its position and re-engage the TPP.

In the state Department of Agriculture’s view, the critical factor is simply that the U.S. get some sort of agreements in place, Perry said.

“For us, either (the TPP or bilateral agreements) is good. We just don’t want to be without either,” she said. “We absolutely need one or the other.”

  • Done Reading?

    Take me back to the top

Latest News

Columbia Center announces arrival of 3 new businesses

Queensgate ramp to close for weekend to prep for roundabout construction

Fast charging station for electric cars opens in Kennewick

Energy Northwest names new CEO

Richland construction company selected for Kennewick school project

E-Newsletter

Sign-up for e-newsletter filled with featured stories and latest news.

Around Town Photo Gallery

Calendar

Share This