Commodity groups largely stressed a “do no harm” approach after learning the White House had started the official clock for renegotiating the North American Free Trade Agreement.
The White House notified the House Ways and Means Committee and the Senate Finance Committee on Thursday that the Trump administration intends to renegotiate the trade deal. The notification starts a 90-day clock for the U.S. Trade Representative’s Office to work with Congress to detail the specific objectives of the trade talks. In mid-July, the White House will release that summary of specifics for a new NAFTA. It is possible negotiations between the three countries could start as early as Aug. 16.
A bipartisan group of 18 U.S. senators sent a letter to newly confirmed U.S. Trade Ambassador Robert Lighthizer this week trying to encourage the administration to do no harm to current areas and industries where trade and the economic impacts are positive.
While Agriculture Secretary Sonny Perdue has announced the creation of a new USDA undersecretary for trade, no name has been submitted for future confirmation. It is unclear if the Trump administration will move to confirm a new trade undersecretary for agriculture before official trade talks begin.
Last month, Perdue was able to talk President Donald Trump out of his plans to simply withdraw from NAFTA, which has been the dominant U.S. trade pact since 1994.
Backing the Trump administration’s gusto on the trade talks, the National Farmers Union sees a chance to rewrite the trade agenda for the U.S. that has led to a $803 billion overall trade deficit last year alone.
In 2016, the U.S. had a $63 billion trade deficit with Mexico and an $11 billion trade deficit with Canada, according to the U.S. Commerce Department.
Roger Johnson, president of NFU, said the deficits lead to lost jobs and lower wages in rural America. “With this renegotiation of NAFTA, the Trump Administration has the opportunity to reset that agenda by instituting a new, fair trade framework that works for family farmers, ranchers, and rural residents. NFU urges them to do so in a fashion that does not upset the positive trade relations the U.S. agriculture community relies upon,” Johnson said.
NFU added that U.S. trade agreements have mainly “advanced the interests of multinational corporations at the expense of family farmers, ranchers, and rural workers.” The renegotiation is a chance to reset that paradigm, the group said. “NAFTA installed, and has since cemented, a set of trade parameters that have benefitted corporate America and damaged rural American communities and economies,” Johnson said.
Dairy groups also support renegotiation. The National Milk Producers Federation, Dairy Export Council and Dairy Foods Association stressed the importance of renegotiating NAFTA to deal with problems the industry is facing with slowing exports to Canada because of a change in Canadian milk-pricing policies. The groups noted U.S. dairy products can face 200%-300% tariffs and policies that distort dairy. “Central to any successful NAFTA negotiations will be changes to Canada’s new policies designed to harm bilateral trade and dump their structural dairy surplus on the world market,” said Jim Mulhern, president and CEO of the milk federation.
The American Farm Bureau Federation will “remain committed to the goal of a positive, market-expanding and modernized NAFTA,” said Zippy Duvall, president of AFBF. Duvall also noted the 2015 Trade Priorities and Accountability Act ensures farmers and other stakeholders get to provide their input with U.S. negotiators on objectives of a new trade deal.
“Our ability to be part of these negotiations is important to our members and will help ensure the outcome improves trade relationships with our neighboring countries,” Duvall said. “Mexico and Canada are two of our largest export markets for the commodities and products raised on U.S. farms and ranches. America’s farmers and ranchers value them as customers and trade partners. We will work to ensure the renegotiation strengthens that critical relationship.”
The National Cattlemen’s Beef Association and other industry groups in Canada and Mexico wrote a joint letter to the leaders of all three countries. The letter urged all three not to jeopardize the beef trade by reinstating policies such as country-of-origin labeling for consumers.
“Recent statements about the possible dissolution of NAFTA or potential renegotiation of NAFTA are deeply concerning to us because of the unnecessary risk it places on our producers,” the letter states. “While there may be general agreement among the countries to improve some parts of the NAFTA trade framework, we urge you to recognize that the terms of the agreement affecting cattle producers are strongly supported as they currently exist and should not be altered.”
U.S. pork exports to Canada were valued at $799 million last year, and shipments to Mexico reached $1.4 billion. The National Pork Producers Council called on the administration to protect the tariff-free access that U.S. pork has in both countries.
“Canada and Mexico are top pork export markets. We absolutely must not have any disruptions in exports to our No. 2 (Mexico) and No. 4 (Canada) markets,” said NPPC President Ken Maschhoff, a pork producer from Carlyle, Illinois.
The U.S. Wheat Associates and National Association of Wheat Growers wrote that the groups are looking for opportunities to boost trade, but the main priority is to do no harm. Wheat exports to Mexico are up 40% this marketing year, making Mexico the largest buyer of U.S. wheat, the groups noted.
“I cannot emphasize enough how important our Mexican customers are to U.S. wheat farmers,” said Jason Scott, a wheat farmer from Easton, Maryland, and chairman of the U.S. Wheat Associates. “There is nothing wrong with modernizing a 23-year-old agreement, but that must be done in a way that benefits the food and agriculture sectors in both countries.”
National Corn Growers Association President Wesley Spurlock, a Texas farmer, urged Lighthizer to remember the interests of U.S. agriculture as they begin modernizing the agreement. He stated that U.S. ag exports to Canada and Mexico have tripled and quadrupled, respectively.
“Exports are one pillar of a strong farm economy, accounting for 31% of farmer income,” Spurlock said. “We export billions of dollars of corn and corn products to these countries each year.”
Chip Councell, chairman of the U.S. Grains Council (USGC) and a Maryland farmer, said NAFTA “is the most critical free trade agreement on the books” for most major commodities, meat and distilled grains. He noted corn products go into Canada and Mexico duty-free, leading to $2.7 billion in sales alone in 2016. The grains council’s main priority is to maintain the market access now in place.
“That demand is an essential part of ensuring farmers can continue to farm in this economy,” Councell said.
Brian King, chairman of USA Rice, just returned from a trade mission to Mexico. The rice group wants to demonstrate to Congress and the Trump administration the importance of NAFTA to rice and the risks of a poorly negotiated deal.
“NAFTA made Mexico our number-one export market and solidified our dominant position in Canada. Our message is simple — modernize NAFTA if necessary, but do no harm to the rice industry,” King said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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