The mCOOL deal boldly illustrated one of the major problems with the WTO — it takes forever to get anything resolved. Our joint experience with mCOOL was not the worst example. The case against Airbus and European companies subsidizing its business has finally been resolved this year. It only took 15 years.

Both American political parties and multiple presidents have expressed displeasure with the operations of the WTO. But the combination of President Trump and U.S. Trade Representative Robert Lighthizer has provided a method to bring things to a head. The U.S. has for some time refused to confirm new appointments to the panel that adjudicates appeals to the WTO. So unless something had been resolved after this column was written (as of December 10), the panel no longer has a quorum to handle cases.

Even Europe agrees that some reforms are necessary, but in usual fashion — my Euro-skepticism is coming out here — nothing has been done but talk, talk, talk.

So what are the big problems?

We’ve referred to the glacial pace of decision-making at the WTO. Efficiency is not there and today’s fast pace of market competition and change demands better and faster decisions.

Then there is the charge of the appellate body going beyond its mandate, in effect making new rules instead of enforcing the ones agreed upon. The WTO members have agreed-upon rules, and those rules should be applied to specific cases. Similar to what happens in America, where leftist political parties have tried to get through the courts what they couldn’t get through Congress, frustrated and aggressive WTO members have pushed the appellate process to get rulings that other member states don’t favour and haven’t agreed to.

Longer-range, the U.S. is used to a free market system where individual companies compete with each other to satisfy the market and grow by doing that better. China is an example of a country that selects “national champions,” state-directed companies that get support, favouritism and special financing from the national government, to boost them beyond what they could achieve on their own. The EU is actually considering developing programs to do the same thing for certain companies in European countries (“Now Is a Good Time to Modernize the WTO,” Wall Street Journal, 12/02/19). Is it any wonder reform efforts at the WTO have foundered?

Both the Chinese and the European countries must listen way too much to American mass media, as they are reportedly leaning toward stalling until President Trump and Lighthizer aren’t around anymore. There is the possibility that could happen in 2020 but the odds are pretty high against it. Which means over five more years of paralysis — both in reform philosophy and actual case resolution. They can expect no quarter from either Trump or Lighthizer, who have demonstrated resolve and long-term vision in trade dealings.

Even the two parties in the U.S. that agree on very little these days, agree on the U.S. position on WTO reform as the Trump administration has outlined it. It is unlikely that the U.S. position on WTO reform will change all that much no matter who is president.

Of course, many folks complain that there are countries that pay lip service to the WTO and then go do whatever they please. While China is cited most often, they aren’t the only ones. And there is the issue of “developed” countries and “developing” countries. Rules allow advantages to developing countries yet China — hardly a struggling developing country — has been allowed to keep its developing status and use rules designed for much smaller economies. Part of the problem is applying WTO rules to the totally different economic model the Chinese have developed. China has a state-run economy in which company officials, company trade secrets and even customer data can be demanded at any time by the national government. Of course, the national government is the Chinese Communist Party.

That array of issues is a huge component of President Trump’s problem with China, as many companies, including high technology companies making things important to military applications, have been victims of such hijackings, while trying to do business with Chinese partners.

That the WTO has not been able to resolve such a simple yet gigantic question about the world’s largest exporter of goods is in itself a telling measure of its failure to adapt. President Trump’s drastic measures to deal with China on his own may not have been necessary if the WTO had been doing its job. But herding all the WTO countries in one direction to reform things has proven too difficult so far.

President Trump has not been shy about using drastic measures if he felt the situation called for it, so his tactics at the WTO should not be underestimated.

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Dauren Matakbayev, director of Kazakhstan’s Republican Chamber of Hereford Breed, says the country has moved past Soviet-era politics. A new generation is working to develop the economy, he said.

Matakbayev and his colleagues are working to build the country’s ag economy, strike partnerships with Canadian organizations and individuals and persuade those in Canadian agriculture to visit KazAgro, the country’s largest trade show, held October 23 to 25. KazAgro focuses on livestock genetics, ag tech, machinery and equipment, according to Alberta Agriculture’s website.

Ag in Motion was not Matakbayev’s first visit to Canada. He has participated in Canadian Western Agribition, worked with cattle exporters and has visited Lakeland College in Vermilion, Alta. He would like to see similar college programs in Kazakhstan.

“One of our goals is to just open the door,” said Matakbayev. “Open the door for new people to come to us. And from Kazakhstan, we can make it a bridge to China, for example.”

Russia and China are major export markets for Kazakhstan. “Because we are Muslims, mainly, the Middle East is keen to work with us, because we do know what Halal means,” adds Matakbayev.

Right now Kazakhstan has around seven million beef cattle, but there’s easily capacity for 25 million head, says Matakbayev. The feedlot industry is still developing, but there’s potential to learn from Canada’s industry because the climate is similar, right down to the mosquitoes in summer.

For more information, visit the KazAgro website. Those with questions about the show can contact Sholpan Kozhabayeva, director at Expo Group, by emailing sholpankn@gmail.com.

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In June, Mexico became the first country to ratify the updated and modernized North American Free Trade Agreement (NAFTA). The new NAFTA will come into force the first day of the third month of all countries completing their respective ratification process. In Canada, legislation to ratify the CUSMA was agreed to at second reading in the House of Commons and referred to the International Trade Committee. The Liberals had indicated they would recall Parliament over the summer if needed to get the bill passed. The path to ratification in the U.S. is a topic Prime Minister Trudeau has discussed with President Donald Trump.

The North American beef industry is a highly integrated market and enables us to sell specific cuts of beef to the customer most willing to pay for it. As CCA relayed recently to the Standing Committee on International Trade in support of CUSMA, having access to markets around the world, including the North American market, means each beef carcass is on average worth $602 more than it would be if sold only to the Canadian market. CUSMA will allow beef producers in all three countries to continue to thrive and industry, in turn, to maintain a positive impact on the Canadian economy.

CCA’s priorities document also outlines key recommendations to further position the beef industry as a key sector of sustainable growth in Canada. CCA’s recommended actions in these and other key areas ensure the regulatory, access and environmental infrastructures are in place to enable industry to successfully compete in and navigate through an increasingly fractious international trade system.

A robust beef industry provides environmental benefits worthy of acknowledgment. In Canada, beef producers protect and sustainably use 44.2 million acres of grasslands through activities such as livestock grazing, which preserves habitat for species at risk and biodiversity. As noted in the State of Canada’s Birds 2019 report, “beneficial grazing on public and private lands is critical for the creation and maintenance of grassland bird habitat.” Further, the report recommends conservation actions including protecting the few remaining grasslands, including grazed public lands, from crop agriculture and restoring native grasslands to provide habitat and increase carbon storage. It also recommends citizens do their part by purchasing from sustainable farms and range-fed beef.

The CCA has long advocated for enhanced protection of the Great Northern Plains, an endangered grasslands ecosystem, from further conversion and encroachment. Canada’s beef industry is the largest Canadian conserver of these grasslands. The pasture and grazing land of Canada’s beef industry provides 1.5 billion tonnes of carbon sequestration annually while the industry’s greenhouse gas footprint is less than half the world average and one of the lowest in the world.

Other topics in the priorities document include addressing changes in the transportation of animals regulations and workforce shortages in the agricultural and red meat sectors. As proper animal care and welfare is paramount in the beef industry, CCA has formally requested a two-year extension on the coming-into-force date of the Health of Animals Regulations — Humane Transport from February 2020 to February 2022 to allow for science-based research to be completed to ensure the best outcomes in humane transportation are achieved.

Regarding labour, CCA applauds the recent announcement of an Agri-Food Immigration Pilot program by the federal government. The pilot is a step in the right direction and will allow beef producers and processors access to much needed workers with the opportunity for a pathway to permanent residency. The CCA and all partners in Canadian agriculture need a strong labour supply and workers with the right skills to grow food production in Canada.

CCA is pleased with the final amendments to Bill C-68, the Fisheries Act. The amended act received Royal Assent on June 21, 2019, and contained several Senate amendments, including the repeal of the “Deeming Habitat” provision, or subsection 2(2). CCA has been asked to provide regulatory development input by the Department of Fisheries and Oceans on defining routine agricultural structures and activities for exemption as well as related codes and standards. This process will take several months at least.

We appreciate the government support in attaining our sustainability goals. In July during the Calgary Stampede, Agriculture and Agri-Food Minister Marie-Claude Bibeau announced an investment of $8.3 million in funding in support of the Canadian beef industry for six projects through the Canadian Agricultural Partnership. Two of the projects are being administered through the CCA and will support the work of the Canadian Roundtable for Sustainable Beef ($1.1 million) and the Verified Beef Production Plus Program ($602,250). Taken together, these projects will maintain Canada’s global leadership position in beef sustainability.

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The issue has shifted from the diplomats and negotiators to the politicians. That’s sad and bad. In the U.S., the treaty is caught up in “we don’t want to give Trump anything” Democratic politics first and then labour union and enviro-zealot demands next. The new agreement incorporates more labour and environmental provisions than any treaty the U.S. has ever signed — similar to those in the TPP agreement from which President Trump withdrew — but the Democrats are still complaining.

I look at most of those provisions as busybody American activists telling other countries what they should be doing. Of course, for our Democrat left, condoning one country’s government meddling in another country’s business is just a short leap from their ideas of our government telling citizens what they can and can’t do.

Speaking of which, I understand the Green Party is winning some provincial seats in Canada, punching above their previous weight. The Liberals under Prime Minister Trudeau are struggling and the Conservatives re-gaining some favour. Movements can start at the local level, as demonstrated recently in Alberta’s elections.

As avid observers of our political chaos, you all know that the left’s fervour devoted to “getting Trump” has not abated much. Only the crash of the China negotiations gathered any attention. But the Trump hunting continues to suck much of the oxygen out of Washington, D.C. An Inspector General’s report — an internal investigation at the Department of Justice — is due in June. More fuel on the fire.

I’m gathering that neither Mexico nor Canada want to move on the agreement before the U.S. votes on it. The Mexican legislature has already passed new laws designed to meet the labour provisions in the new agreement. They are disinclined to revisit the subject again.

I’m told there are actually some U.S. House committees working on something other than nailing Trump to the barn door — they have actually subpoenaed financial records from his grandchildren — but it takes some looking.

The key House Ways and Means Committee chairman at last word was undecided. House Speaker Nancy Pelosi has called for changes in the agreement. Putting a trade deal in front of American members of Congress and telling them they can’t change it is like putting prime rib from Golf’s in Regina in front of me and saying I can’t touch it. You get a 10-second delay for photos and that’s it.

The House Ways and Means Committee chairman back in March said he didn’t foresee Congress voting on the agreement by summer. He had leaned towards not reopening the agreement but equivocated by saying he hadn’t seen the text.

The Senate Finance Committee chairman Chuck Grassley of Iowa is pushing for the treaty but sees some roadblocks. He said there “is no appetite in Congress for debating the agreement with the steel and aluminum tariffs in place.” Canada and Mexico have said the same. American pork producers would certainly like to get their Mexican markets back. Grassley points to the 12 million U.S. jobs dependent on trade with Canada and Mexico. His comments about free trade agreements are cogent:

“I have been involved in the passage of every U.S. free trade agreement, and it’s never easy,” Grassley said. “Reorganizing a massive economic relationship affects many constituencies, and that’s inevitably complicated.” Not getting the agreement ratified this year would also damage U.S. credibility in getting the China-U.S. deal done.*

He also said we should be dealing with the steel industry overcapacity by dealing with China, meaning, not with Canada.

Your Canadian Cattlemen’s Association has pointed out that Prime Minister Trudeau had said he didn’t want to present the agreement to Parliament until Congress is at least debating it. With Parliament rising in June and no sessions until after October’s elections (how do you all manage that sweet deal?), that likely puts Canada’s approval to the end of the year.

Note: After this column was written, news broke that Prime Minister Trudeau, President Trump and trade officials had agreed in a series of phone calls to lift America’s steel (25 per cent) and aluminum (10 per cent) tariffs on Canadian metals and Canada’s retaliatory tariffs almost immediately. Similar agreements have been executed with Mexico. This removes the key obstacle to Parliament’s ratification of the CUSMA-USMCA treaty. Canada had refused to accept steel quotas and the U.S. reportedly agreed to drop that demand. Both countries will monitor imports and work together, if necessary, to deal with unfairly subsidized, cheaper metal imports or transshipments to either country. The agreement will also help boost Congressional support for passage of the treaty.

*(“Trump’s Tariffs End or His Trade Deal Dies,” Wall Street Journal, 4/29/2019)

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Reportedly, the Chinese did not want any loose ends that could tempt President Trump to get up and walk as he did in North Korea. They also want everything approved by the Communist Party leadership and President Xi beforehand. Why the Chinese would make any comparison between their negotiations with President Trump and those with the unpredictable, sanity-questioned Kim Jong-Un, I’m not sure. But I do like the idea of having things buttoned down beforehand, rather than gambling that the Chinese would make some last-minute concession.

So by the time you read this, either history has been made or it may be close.

Probably the most important news coming out of late-term negotiations was that the Chinese were regarding — and we’re assuming telling the folks back home — the significant structural changes they were agreeing to were steps to open up China’s economy to the rest of the world. That actually is true but that they have settled on an explanation that involves no loss of face is critical to the success of the deal.

Into late stages of negotiations, only the status of intellectual property protection and overall enforcement mechanisms were still being thrashed out. Hormone or ractopamine restrictions on beef were still on the table.

Pork producers here in the U.S. are wishing Congress would get its act together and pass the USMCA very soon, as the lack of sales to Mexico because of retaliatory tariffs has been very damaging. The lack of sales to China has also been hurting. But the impact of African swine fever (ASF) has finally forced the Chinese to buy over 23,000 tons of pork in early March, despite a 62 per cent tariff, Reuters reported. That’s the biggest purchase in two years. The official ASF count is 111 cases in 28 provinces in China. The official count of pigs culled is one million but is estimated by outsiders as many times that number.

Whatever that number is — and climbing — the Chinese will eventually need a lot of pork. As the largest pork producer in the world, just a 20 per cent drop in production for them would equal 50 per cent of U.S. production, Scott Brown said. Brown is extension economist at the University of Missouri. China has been getting 70 per cent of their pork from the EU during the trade war but that could shift quickly if ASF spreads from eastern Europe into Western Europe, noted Don Close of Rabo AgriFinance. Both appeared on the April 6, 2019 episode of U.S. Farm Report.

The potential Chinese purchase needs could not only support pork prices in North America but ease any competitive price pressure on beef from cheaper pork prices. In the U.S., we’re heading into prime grilling season, which should help demand, but getting more pork exports in gear would certainly help.

Congressional sources are not expecting any vote on USMCA until midsummer, despite the damage on U.S. farmers from having retaliatory tariffs on Mexico and China. Should the vote be delayed or worse, the treaty voted down, prices for pork could plummet and beef prices take a hit. Beef exports have increased enough elsewhere in the world that it has escaped major effects.

The U.S. Meat Export Federation reported that U.S. beef exports to Mexico were up eight per cent, in spite of the tariffs, while pork exports to Mexico were down 13 per cent. Pork exports to Canada were down four per cent and beef exports were down six per cent.

Pork exports to China were down 21 per cent in 2018 and started 2019 off 20 per cent.

Neither Canada nor Mexico has been happy with the U.S. steel and aluminum tariffs still being in place. The indications originally were that they would be lifted when the USMCA was signed. That changed into when the treaty was passed. Negotiations are still ongoing and some kind of quota system has still been mentioned. But President Trump has apparently grown more comfortable with at least some kind of restriction on steel and aluminum imports.

The impact of the flooding in Iowa and Nebraska will not have a huge national impact on markets, despite the severe local effects. But much of the Corn Belt experiencing very wet weather could have more impact on corn prices if planting is delayed.

Bottom line: The prospect of a Chinese-American trade deal and ASF hold major potential for the beef world.

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Even without leaks, increasingly higher levels of officials have been shuttling back and forth — a good sign. By the time you read this, the 90 days will be up and either an agreement will be signed or President Trump could be in the process of increasing 10 per cent tariffs to 25 per cent, a move the Chinese really want to avoid, given the state of their economy, banking system and currency.

If there is going to be an agreement at all, structural changes to handling intellectual property, to technology transfers and state-supported companies must be made and monitoring and enforcement systems agreed. The Chinese have indicated willingness to increase purchases of ag commodities but non-tariff trade barriers have been livestock’s problem. The ractopamine ban is unlikely to change, due to China’s own ractopamine history. Other residues (non-scientific barriers), traceability and China’s individual plant approval approach are issues to be improved.

Experts say China will wait until the last minute to put their best offer on the table.

It has fallen to Canada to have one of the biggest fish in the Huawei scandal when unseen hands decided to pull the trigger on that company. It remains to be seen if China really retaliates on the Canadian citizen they re-sentenced or if that was posturing that will eventually be walked back. The Chinese have not seemed to connect the incident publicly to the China-U.S. negotiations, as they do not want to call attention to the scandal. Polish officials also arrested a company official. Other countries have followed the Trump administration’s lead in expressing concern over Huawei’s potential security threats to global telecommunications.

Trade negotiation preparations have lagged significantly between the U.S. and Japan. The Japanese have not agreed to the depth and breadth of the negotiations President Trump wants to conduct. That is particularly troubling to American agriculture, given that the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) has now kicked in, giving that agreement’s beef producers a tariff break from the 38.5 per cent American cattlemen have had to contend with. Australia has already had a trade deal with Japan, giving it a double tariff advantage over the U.S. Now Canada gets an advantage.

Vietnam has recently joined the CPTPP, meaning that the “Greater China” market now has access to cheaper beef from the CPTPP.

The Japanese have been told the Trump administration will hold off an additional 25 per cent tariff on autos if good faith negotiations are under way in a timely manner. The Japanese have tap danced a bit but U.S. Ambassador to Japan William Haggerty made it plain.

“Our goal is to have a trade agreement that is no worse than any other terms that Japan has with other countries,” he said.

While Japan has been stubbornly resistant, personal meetings are always powerful movers and Trump could be in Japan in May for a state visit and during the Group of 20 Summit in June in Osaka.

As for the steel and aluminum tariffs we discussed last month, it appears more and more likely that they are being maintained to keep the pressure on Canada’s Parliament until they have ratified the USMCA.

Then there is the EU. Even under steady pressure from U.S. negotiators, EU officials have refused to put agriculture in general on the table. But they have signaled they would deal with a few side issues, one of them, perhaps, being the hormone ban quota.

There is one major unknown that could rattle the global trade picture. We know that African swine fever (AFS) is present in China. We don’t know just how far and wide it has spread there but word coming out of China is that both small and large operations in many parts of the country have been affected. Brett Stuart of Global Agritrends said the official number of pigs being culled was 900,000 around February 1. Calculating that likely only one in 10 incidents were being reported, that would mean 10 million pigs culled already.

AFS is the most feared pig disease. There is no vaccine and mortality is very high, near 100 per cent, Stuart said. It is carried by wild boars, warthogs and bush hogs. The virus will survive 1,000 days in frozen pork.

Half of the pigs in the world are in China, especially in the eastern regions. The spread of the virus there is inevitable. The question is whether it can be kept from spreading to other countries. ASF has already been found four times in tourist sausage.

Pork demand will turn lower but prices will go higher with the drop in supply.

Stuart’s best news was that global beef supply has grown over the last four years (2015-19), some six million head outside of Brazil — 50 per cent of that in the U.S. — and yet demand and prices have held up. Brazil’s herd has increased by 10 million cows but it has consumed them domestically.

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ERS forecasts that 2019 broiler production will be up 1.7 per cent on 2018 at an estimated 43.370 billion pounds. Beef production will total 27.810 billion pounds, up 3.3 per cent on 2018, and pork production will set a new record of 27.715 billion pounds, up 5.3 per cent on 2018. Turkey production will total 5.905 billion pounds, up 0.5 per cent.

Like last year, strong demand will be the key to the financial health of the red meat and poultry industry this year. Potential negatives will be stock market volatility in the U.S. and overseas, and trade issues. The latter includes tariffs and uncertainty that Congress will ratify the new U.S.-Mexico-Canada Agreement (USMCA), which would replace the 24-year-old North American Free Trade Agreement. The three countries signed the agreement in late November. But Congress is unlikely to take up ratification until a newly elected House of Representatives is seated early this year. Moreover, House Democrats might try to alter terms of the agreement and delay or even block its ratification. If that happens, would NAFTA remain or end?

A report last November painted a sobering picture of the cost to the U.S. of the Canadian and Mexican tariffs and the cost of not ratifying the USMCA. While the tariffs remain in place, they would negate USMCA export gains, said an analysis commissioned by the Farm Foundation. Market access improvements included in the USMCA are expected to increase U.S. agricultural exports by US$450 million, mostly in the poultry and dairy sectors. But this gain will be offset by retaliatory measures taken by Canada and Mexico, it said.

Under the USMCA, meat product exports are projected to increase by 1.6 per cent and the agreement is expected to produce modest benefits for U.S. farm income and labour demand, said the analysis. Retaliatory tariffs imposed by Canada and Mexico, however, could cause U.S. agricultural exports to these two key trading partners to decline by US$1.8 billion and US$1.9 billion, respectively. U.S. agricultural exports to Canada and Mexico would decline more than US$9 billion and export revenue would fall US$12 billion if the U.S. withdraws from NAFTA without ratifying USMCA, said the analysis.

Tariffs will also play a big role in Japan, the U.S.’s top beef export market. On a value basis, the U.S. is the top supplier to Japan, with 46.8 per cent of imports in last year’s first three quarters. This was up slightly from the prior year. But on a volume basis, U.S. beef accounted for just under 42 per cent of total imports, down from 43 per cent in 2017 and trailed Australia’s 48.6 per cent. Competition will heat up this year as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) took effect December 30. U.S. beef will continue to face Japan’s 38.5 per cent tariff, while the tariff on CPTPP countries’ beef will be much lower.

Japan’s tariff on Canadian beef is now 27.5 per cent on fresh beef and 26.9 per cent on frozen beef. On April 1, Canada will enjoy a second decline to 26.6 per cent on both categories and an eventual decline to nine per cent. With CPTPP, Canadian beef will also be exempt from the Japanese safeguard tariff of 50 per cent on frozen beef. The same lower tariffs will apply to New Zealand’s and the other CPTTP countries’ beef entering Japan. The U.S. industry expects to see increased competition in Japan from all these countries.

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His comment was that discussions were rumoured to be stuck on the myriad different products made from the two metals and how to regulate them if the path was to be quotas instead of tariffs.

My immediate thought was why not regulate the source steel and aluminum stock and be done with it. Government officials seem only able to talk in that government vernacular that uses many more words than usual to obscure rather than explain the meaning of things. Coming up with lists of hundreds of products rather than putting quotas on tons of steel or aluminum is probably a no-brainer for them.

Of course, the assumption by us bumpkins out in the country is that, naturally, everyone wants to see the tariffs go.

That may not, necessarily, be true.

If President Trump is serious about reviving the U.S. steel industry, it may not be the case. Plants have been reopened and workers hired back but that is not the same as a serious revival of the industries.

Supposedly, the original goal, according to Commerce Secretary Wilbur Ross, was to get U.S. steel capacity up to 80 per cent utilization, having increased it to 77.4 by September. Some 1,000 jobs have come back in basic industries. But the real impact has been on pricing, with hot rolled steel peaking up 50 per cent in midsummer and softening to $850/ton in the U.S., compared to US$650 in Canada and less in the EU.

But industry experts say little appears to have been done along the lines of investments to make the U.S. steel industry more competitive long term. The industry might see the tariffs as a temporary way to make a quick buck before they go away. That would mean they need more certainty or more incentive to make efficiency upgrades. That could come in the form of keeping the tariffs or installing quotas.

By our evaluation, that would do little to salve Canadian sensitivities, still smarting from U.S. Trade Representative Robert Lighthizer and President Trump’s rough and tumble approach to renegotiating NAFTA.

Get rid of the tariffs and prices will certainly soften. But while Canada provides roughly 15 per cent of the steel U.S. imports, Canada gets 90 per cent of the steel U.S. exports.

As usual, when the principles of free trade aren’t followed, the result is lots of regulatory make-work, unneeded complexity and higher prices for consumers.

We haven’t been able to ascertain if negotiations have continued parallel with the Mexican government. Mexico had an administration changeover December 1 and the biggest agricultural hits in the U.S. have been from Mexican tariffs on American pork and dairy. Access to Canadian dairy markets are at issue for American farmers.

The G20 met at the end of November in Argentina. The initial plan was for the three countries to formally sign the treaty November 30, which fell conveniently during the summit. However, leading up to the summit, there were rumors Mexico would not sign the treaty if the tariffs were still in place. Prime Minister Trudeau didn’t indicate his position would be the same.

But there is reportedly a major reason Canada did not make noise about stalling on signing the USMCA. Politico Pro, a U.S. reporting agency and the CBC had reported that a side letter negotiated with the treaty was to protect Mexico and Canada from various assembled autos and auto parts tariffs should the U.S. impose a 25 per cent tariff on imported autos and parts.

Of course, that potential 25 per cent auto tariff is the big stick with which President Trump is threatening Japan and the EU. As beef producers, American cattlemen would love to see the president whip up on the EU, after 30 years of exclusion of our beef, despite the insistence of even their own scientists that our beef is safe. U.S. officials are getting close to serious negotiations with Japan, following up on President Trump’s predilection for bilateral agreements instead of multilateral.

In the States, the guessing game now is how much the election changeover from the Republicans to the Democrats in the House of Representatives will affect the ratification of the USMCA. Lighthizer claims he consulted the Democrats in negotiating the treaty, so as to head off some problems they might have had with it. The bizarre run-up to the election partially served to unify the Republicans. If that were to hold, only a dozen or so Democrat votes would be necessary to pass the treaty.

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Under the CPTPP, Canadian beef exports to Japan could double in 2019, up from the $160 million of beef exported to Japan in 2017 under the old tariffs on fresh and frozen beef. On December 30, Japan’s tariff of 38.5 per cent will immediately drop to 27.5 per cent on Canadian fresh beef and to 26.9 per cent on frozen beef. On April 1, 2019, Japan will implement a second tariff cut, down to 26.6 per cent on both fresh and frozen, and eventually down to nine per cent over several years. With CPTPP, Canadian beef will also be exempt from the Japanese safeguard tariff of 50 per cent on beef.

The remaining five countries, Brunei, Chile, Malaysia, Peru and Vietnam, are continuing their ratification processes. Vietnam in particular is an emerging market with important growth potential for Canadian beef. Canadian beef exports to Vietnam in 2017 were $3.9 million with a 20 per cent tariff. Once Vietnam implements CPTPP in 2019, their initial two tariff cuts will immediately bring the tariff down to 6.6 per cent and then to zero in 2020.

The CPTPP, along with the recent United States-Mexico-Canada Agreement (USMCA), will create extraordinary growth opportunity for the Canadian agriculture and food sectors. It remains to be seen if the Democrats winning the House in November’s U.S. midterm elections may have an impact on the final approval of the USMCA. The Canadian Cattlemen’s Association (CCA) will be watching this situation closely in the months ahead.

In November, I participated in Agriculture and Agri-Food Minister Lawrence MacAulay’s trade mission to China, where he promoted Canadian agricultural products, including beef, and discussed ways of strengthening agricultural trade between the two countries. CCA participated in beef events in Shanghai and Beijing and was involved in meetings with the embassy and industry in the latter city. China is an important market with massive potential for Canada’s beef producers and CCA continues to advocate for expanded access in this politically complex market at every possible turn.

The Government of Canada’s renewed focus on trade diversification is very much appreciated by the CCA; however, the ability to meet the potential of new access requires that a number of competitiveness issues be addressed. At a roundtable session with Minister of International Trade Diversification Jim Carr in Winnipeg recently, the CCA and industry partners discussed the need to address, through labour policy changes, the chronic labour shortages within the agriculture and food sectors that will intensify as the global market for Canadian agricultural products rapidly expands. The need to enhance and modernize the capacity of transport routes was also brought forward. Concern was raised with regard to the appropriateness of the federal government’s carbon pricing policy for the Canadian agriculture and food industries. Suggestions were made that other tools may be more effective and less trade-deterring for the highly traded and globally competitive industry. As Canada is a leader in green agriculture and food production, future discussion regarding the appropriate tools to continue this leadership was suggested.

Canada’s leadership in sustainable beef production and the nutritional benefits of beef to human health were the main themes of a meeting I had with Minister of Health Ginette Petitpas Taylor in Ottawa. CCA staff and I shared our perspective about the food guide and front-of-package labelling with the minister, letting her know that red meat is an important part of a healthy and balanced diet, and of the need for Canadian health and nutritional policy to be based on sound and consistent scientific evidence. The perils of including misguided information in the food guide or on warning labels on foods high in saturated fat, like ground beef, could push people away from an affordable nutrient-dense protein staple of benefit to human health.

The CCA also continues to advocate for the need to amend Bill C-68 to protect fish habitat without undermining farmers’ ability to produce food in a sustainable manner. The CCA believes there is opportunity to work with the government to find solutions that will satisfy both perspectives.

In another positive development, in January 2019, Canada’s beef yield grade standards will change from the current three classes to five yield grade standards to mirror U.S. yield grade standards. The Canadian Beef Grading Agency said the move to five yield grade standards will allow alignment and transparency with the U.S. and will also provide enhanced distinction between higher- and lower-yielding carcasses providing the opportunity for improved targeted finishing practices.

The new year will be one of reinvention and re-examination of how best to take advantage of the opportunities. And with that, Bonnie and I would like to extend our heartfelt wishes for a joyous holiday season and a happy new year.

Until next time.

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China in July imposed an additional 25 per cent duty (on top of a 12 per cent duty) on U.S. beef exports to China. This will severely limit exports the remainder of this year, meaning export losses of more than US$30 million, says the U.S. Meat Export Federation. But the real impact is the lost opportunities for export growth over the next couple of years. It estimates that exports to China could grow from the pre-tariff 2018 value of US$70 million to US$430 million by 2020. Lost opportunities over the next couple of years will be in the hundreds of millions of dollars if the tariffs are not quickly returned to the normal 12 per cent, it says.

Canada had earlier (on July 1) imposed US$170 million of tariffs on cooked beef products. It is the U.S.’s largest market for these items so the tariffs will have an impact on some companies’ business. Canada’s beef tariffs were part of a package of US$12.6 billion worth of retaliatory tariffs on a wide range of U.S. goods. How long the tariffs remain in place is anyone’s guess, as the signing of the new United States, Mexico, Canada trade agreement late last month offered no resolution to this particular tariff war.

Now cattle hides have joined a long list of U.S. food and agricultural exports to face Chinese tariffs. A five per cent tariff on all wet blue and raw hides going to China took effect September 24. Smaller skins such as calf skins face a 25 per cent tariff. The tariffs were part of another US$60 billion of tariffs imposed on U.S. exports by China. Its action came in retaliation for the U.S.’s imposition of new tariffs on another US$200 billion of Chinese goods, which also took effect September 24.

China’s tariff on hides might have little impact on U.S. hide prices as prices are already extremely weak. The U.S exports as much as 80 per cent of its cattle hides to China, which is by far the largest importer of hides and skins in the world. But its imports over the past five years have been largely stagnant and recently began declining for several reasons, including weaker global demand for leather.

This and a U.S. cattle slaughter that is up 2.7 per cent on last year had already depressed hide prices. Prices for steer and heifer hides are down 25 to 30 per cent on this time last year and prices for cow hides are down as much as 262 per cent on last year. Lower-grade hides being produced have no value at all. This means another headache for packers. They can’t give them away and hides are extremely difficult to dispose of.

A possibly greater impact on hide prices is that leather products made in China and exported to the U.S. are among the new tariffs imposed on Chinese goods. Products that now have a 25 per cent tariff include luggage, bags, gloves, belts, wallets, furniture and auto seats. In the 12 months to July 31, China exported US$451.5 million worth of leather handbags and $258 million of leather gloves to the U.S. So everything from Gucci handbags to baseball mitts suddenly got more expensive for Americans.

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