As this issue arrives in your mailbox the industry is gathering in London, Ont., for the third Canadian Beef Industry Conference.
It’s a place to network, exchange views on issues of the day, and gain a sense of whether the industry is still on track with its National Beef Strategy.
Trade is a large part of that strategy, and at the moment the Canadian beef industry is waiting with some trepidation to see if the U.S. will counter Canada’s retaliatory 10 per cent tariff on U.S. processed beef products with one of its own on Canadian beef or cattle.
That one move could throw our national beef strategy into a tailspin. As of May 31 our beef and veal exports to the U.S. were running eight per cent ahead of last year at 112,458 tonnes, or $756 million in dollar terms. By comparison, Canada exported 37,855 tonnes worth $249 million to the rest of the world over the same period.
The visceral need to strike back against U.S. tariffs on Canadian steel and aluminium under the cloak of national security was a necessary response, but it’s too bad the government expanded the field of fire to include about $170 million worth of beef products in its calculations. Little wonder that many of us check Trump’s twitter feed daily to see if we are next in line to be punished.
The NAFTA negotiations may be in limbo waiting for a new Mexican government to take power but that doesn’t mean the U.S. has lost sight of the negotiations. As Trump has made clear tariffs are the club he plans to use to coerce concessions out of America’s trading partners. It’s a brutal negotiating tactic that causes considerable economic harm on both sides, as U.S. farmers are finding out.
A $12 billion bale out for farmers hurt by Trump’s own trade adventures is a sign that some with influence near Trump are worried about the political fallout in farm states. But this a Band-Aid at best.
National Corn Growers Association president Kevin Skunes summed up the farm/rural reaction rather nicely. While he appreciated the administration recognizing the harm to producers caused by tariffs and trade uncertainty, he noted, “corn farmers prefer to rely on markets, not an aid package, for their livelihood.”
And the NCGA will continue to push for the Trump administration to rescind the Section 232 and 301 tariffs.
In other words, give us back our NAFTA. Tune it up if you must but don’t remove it. Trump no doubt appreciates the almost uniform voter support he received from farmers in 2016 but it appears he doesn’t intend to pay them any heed on his trade tactics. Just be patient, he says, and all will be well.
Well for whom? That’s a chilling prospect.
It is almost impossible to fathom what the ultimate end game would be to such negotiations. Using trade deficits to measure success is a silly yardstick, especially when it doesn’t include services and other soft products. If that was the goal Trump could just coerce his minions into driving down the value of the U.S. dollar.
Demanding a five-year sunset clause on NAFTA is an obvious red herring, and according to the auto industry, the demand for more U.S. content in North American autos is another.
So what does Donald Trump really want? That’s a question to keep one awake at night, but there is little the Canadian beef industry could do about it anyway, other than continue to talk to U.S. farmers about their common concerns.
What they can do is continue to apply the full industry press on the Liberals in Ottawa to sign and seal the Comprehensive and Progressive Agreement on Trans-Pacific Partnership as soon as the MPs return in September. The TPP, and more specifically Japan, will never replace a big dip in the U.S. market but every bit would help if Mr. Trump wakes up some morning with an urge to take another swat at Canada. Sales to Japan are already up eight per cent worth an additional $10 million this year
The EU is caught in the same Trump trap and they reacted by signing a free trade agreement with Japan shortly after the Trump tariffs went into force. Then just as this issue was going to the printer European Commission president Jean-Claude Juncker was in Washington agreeing to lessen trade barriers with the U.S. and a promise to buy American soybeans and liquefied natural gas to open the door to talks on dropping the tariffs on steel and aluminium and other tariffs and non-tariff barriers.
If the U.S. gets the EU to drop its requirement for non-implanted beef you can bet the Canadian Cattlemen’s Association will be rapping on the ag minister’s door the next day asking for equal treatment under our free trade agreement with the EU. As it is, the additional access to the EU is a bit of a left-handed offer since it is very awkward to qualify large amounts of beef to supply this market.
Wouldn’t that be something if Trump pushed the EU to open up its market to North American beef. It wouldn’t be enough to make up for the threats to NAFTA though.