The U.S., Mexico and Canada concluded a second round of NAFTA discussions yesterday as President Trump has continued to criticize the trade measure. Meanwhile, concerns surfaced over the weekend about the possibility of a U.S. withdrawal from the South Korean trade pact that went into force in 2012. However, subsequent remarks from U.S. Trade Representative Robert Lighthizer yesterday appeared to mitigate the likelihood of that happening. President Tump's recent trade activity was strongly criticized in an opinion column today by Robert B. Zoellick, a former World Bank president, U.S. trade representative and deputy secretary of state. Today's update provides an overview of recent news articles highlighting these trade issues, which have important implications for U.S. agricultural producers.
Sara Schaefer-Munoz and Bob Davis reported in Monday's Wall Street Journal that, "[In the opening-round of talks to remake the North American Free Trade Agreement] which concluded Sunday, the [U.S., Mexico, and Canada] said in a trilateral statement they had made 'detailed conceptual presentations' of their positions and were working toward 'an ambitious outcome' through a fast-paced schedule of negotiations. Early tensions over areas such as the so-called rules of origin—a major issue for the automotive industry—signaled the tough bargaining that lies ahead as the three nations try to wrap up a deal by early next year."
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."
Today's update looks at recent news items that focus on the first round of NAFTA trade negotiations that are scheduled to start this week. Along with some general background, the articles also highlight perspective from both Canada and Mexico, and explore agricultural concerns associated with the NAFTA discussions, particularly with respect to pork and corn.
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.
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.
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.
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.
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."
Andrew Soergel reported earlier this week at U.S. News Online that, "As President Donald Trump's administration sifts through its trade toolbox, preparing to tinker with the North American Free Trade Agreement, the agriculture world is holding its breath."