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Trump delivers trade blows

Prime Cuts with Steve Kay: From the March 2017 issue of Canadian Cattlemen

President Trump quickly shattered any final hopes U.S. cattle producers had that he would relent on his pledges to withdraw the U.S. from the Trans-Pacific Partnership or leave NAFTA alone. Now they and other ag groups will have to persuade the administration to open up export markets in other ways as quickly as possible.

Many groups expressed dismay after Trump’s executive order over the TPP. But U.S. participation had died during the presidential election campaign, as both Trump and Hillary Clinton vowed to withdraw. With the TPP dead, the U.S. industry now realizes it must push hard for bilateral trade deals, especially with Japan. The U.S. beef industry is losing an estimated US$400,000 in sales per day there.

Of more concern is that Trump also affirmed another campaign pledge, to renegotiate the North American Free Trade Agreement. The fear is that anything more than minor changes might damage the industry, as it is highly integrated with Canada’s and Mexico’s.

The beef industry will be hoping that bilateral deals might lead to a start to reduce the 38.5 per cent tariff that Japan imposes on U.S. beef (and Canadian beef). The Trump administration says it will begin negotiating bilateral trade deals with the countries in the TPP agreement. TPP includes 11 other countries in the Asia-Pacific region.

The National Cattlemen’s Beef Association, the North American Meat Institute and the U.S. Meat Export Federation all hope this will occur. USMEF remains fully committed to its valued trading partners in the TPP and NAFTA, says president and CEO Phil Seng. These countries account for more than 60 per cent of U.S. red meat exports. In some of these key markets, the U.S. red meat industry will remain at a serious competitive disadvantage unless meaningful market access gains are realized, he says.

NCBA is especially concerned that the administration is taking these actions without any meaningful alternatives in place that would compensate for the tremendous loss that cattle producers will face without TPP or NAFTA, says president Tracy Brunner. Sparking a trade war with Canada, Mexico and Asia will only lead to higher prices for American-produced beef in those markets and put American producers at a much steeper competitive disadvantage. Ninety-six per cent of the world’s consumers live outside the U.S. Expanding access to them is the single best thing the U.S. can do to help cattle-producing families be more successful, he says.

The Canadian Cattlemen’s Association also weighed in on President Trump’s decisions. The economic benefits of Canada-U.S. agriculture trade are clear, it says. Canada is the largest export customer for almost all large U.S. agricultural-producing states, purchasing around $714 per capita of U.S. agricultural products, while the U.S. purchases around $69 per capita of Canadian agricultural products. Canada is the U.S.’s top customer for overall trade, purchasing more than China, Japan and the U.K. combined, and Canada is its closest ally. Prime Minister Justin Trudeau has indicated that Canada welcomes a negotiation to update and improve NAFTA. As for the U.S. withdrawing from the TPP, CCA has encouraged the Government of Canada to pursue alternate plans, including completion of a Canada-Japan agreement to ensure Canadian beef producers get the trade access they need.

NCBA president Brunner in his comments noted that the TPP and NAFTA have long been convenient political punching bags. But foreign trade has been one of the greatest success stories in the long history of the U.S. beef industry, he added. Now it’s up to him and other industry leaders to persuade the Trump administration to build on rather than further undermine that success.

About the author

Contributor

A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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