NAFTA 2.0: Renegotiations Begin

William Mauldin and Paul Vieira reported earlier this week at The Wall Street Journal Online that, "The Trump administration launched the renegotiation of the North American Free Trade Agreement Wednesday by laying out a starkly different vision from that of its two continental trading partners of how the pact has worked and how radically it should be rewritten. The wide gap between the administration’s opening rhetoric and the positions of Mexico and Canada suggests a difficult road ahead in redoing the 23-year-old accord, even discounting for the posturing at the opening of any negotiation."
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House Ag Committee Examines NAFTA- Trade Issues

Since President Trump took office in January, many in the agricultural sector have been leery of potential executive branch actions on trade, particularly with respect to China and our NAFTA trading partners.  As the NAFTA renegotiation process begins to unfold, the House Agriculture Committee held a hearing yesterday titled, "Renegotiating NAFTA: Opportunities for Agriculture."  Today's update looks at some of the issues that lawmakers highlighted at yesterday's Ag Committee hearing.
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Policy Change on U.S. Beef Exports to China- Early Impacts Explored

Recall that last month, trade rules regarding U.S beef exports to China were finalized.  The U.S. had not exported beef to China since 2003, and on June 30th, an update from USDA indicated that, "U.S. Secretary of Agriculture Sonny Perdue today joined with U.S. Ambassador to China Terry Branstad to slice a Nebraska prime rib in a Beijing ceremony, formally marking the return of U.S. beef to the Chinese market after a 13-year hiatus."  Today's update highlights a recent news report describing how this important trade policy change is beginning to impact market participants.
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U.S. Ag Trade Data Update: Some Interesting Observations

Late last week, the U.S. Department of Agriculture updated its monthly agricultural trade data.  The data contained some interesting information with respect to U.S. agricultural exports.  The U.S. ran a small, but very rare monthly agricultural trade deficit in May; and, U.S. corn exports to Mexico from January through May of this year were down approximately seven percent from the same time last year.  Today's update also includes recent perspectives on NAFTA renegotiation and agricultural issues.
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Farm State Senators to USTR: On NAFTA, “Do No Harm.”

The Senate Finance Committee held a hearing yesterday to examine the administration’s approach to trade policy, and heard testimony from U.S. Trade Representative Robert Lighthizer. Farm state lawmakers expressed concern regarding agriculture and NAFTA renegotiation, admonishing the executive branch to "do no harm" with respect to gains in agricultural trade that have resulted from the agreement. Timelines for the renegotiations were also discussed, as well as agricultural trade issues with China. Potential future bilateral trade negotiations were also mentioned.
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As Mexico Explores Options to Reduce Reliance on U.S. Ag Imports, NAFTA Ag Ministers Meet in Georgia

Wall Street Journal writer Jacob Bunge reported late last week that, "Friction between the U.S. and Mexico over trade is starting to cut into sales for U.S. farmers and agricultural companies, adding uncertainty for an industry struggling with low commodity prices and excess supply. Over the first four months of 2017, Mexican imports of U.S. soybean meal—used to feed poultry and livestock—dropped 15%, the first decrease for the period in four years, according to data from the U.S. Department of Agriculture. Shipments of U.S. chicken meat fell 11%, the biggest decline for the period since 2003. U.S. corn exports to Mexico declined 6%. Mexico is the largest U.S. export market for those commodities."
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U.S. Ag Exports to China: Soybeans and Corn

Mary A. Marchant indicated recently at Choices Online that, "International trade deficits have recently been reputed as 'bad' for the economy; however, agriculture has posted a trade surplus since 1959. For U.S. agriculture, trade represents 20% of farmers’ income on average, and more for specific commodities—70% for cotton and tree nuts; 50% for wheat, rice, and soybeans: and almost 20% for meat and dairy products. Thus, tossing trade would be comparable to U.S. farmers destroying 20% of their yields. China, which has advanced to become the United States’ largest agricultural export market in an unprecedented time frame, plays a key role in the economic wellbeing of U.S. agriculture."
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