President Donald Trump will be in Nashville, Tennessee on Monday to speak at the American Farm Bureau Federation’s (AFBF) 99th Annual Convention. The AFBF noted recently that, "After three consecutive years of decline in farm sector profits, President Trump will speak to Farm Bureau members during a period of prolonged economic challenge across farm country." In fiscal year 2017, the U.S. exported $140.5 billion worth of agricultural products; and, the U.S. Department of Agriculture explained recently that, “Exports are responsible for 20 percent of U.S. farm income, also driving rural economic activity and supporting more than one million American jobs both on and off the farm.” AFBF members will be keenly interested in any remarks the President makes regarding trade policy, and the North American Free Trade Agreement (NAFTA) on Monday. With this in mind, today's update focuses on recent NAFTA developments and agriculture.
Yesterday, the Senate Finance Committee held a hearing to consider the nomination of Robert Lighthizer to be United States Trade Representative. With respect to agricultural trade issues, China, the North American Free Trade Agreement (NAFTA), and Japan were all topics that were touched on.
Shawn Donnan reported yesterday at The Financial Times Online that, “Addressing a Senate confirmation hearing on Tuesday, Robert Lighthizer said Mr Trump, who railed against China throughout last year’s presidential campaign, remained committed to getting tough with Beijing and using a ‘multi-faceted approach’ to crack down on trade abuses.
“‘I believe [Mr Trump] is going to change the paradigm on China and if you look at our problems China is right up there,’ Mr Lighthizer told senators.”
The FT article pointed out that, “Mr Lighthizer is also known as a ferocious political operator and negotiator. A close aide in the late 1970s and early 1980s to Bob Dole, the former senator and presidential candidate, Mr Lighthizer rose rapidly through the staff ranks on Capitol Hill before joining the Reagan administration as deputy US trade representative while still in his 30s.”
Donnan added in his FT article that, “In 2010 testimony to a congressional commission [Lighthizer] called for the US to be more belligerent in its approach to China and the WTO.”
More specifically on an aggressive stance with China and agricultural trade variables, Jason Noble reported at The Des Moines Register Online on Saturday that, “One big challenge in any effort to rein in China on trade is that American agriculture would likely be the first target of any Chinese response to Trump’s actions, several experts warned. As a Midwestern governor, [Terry Branstad] will be sensitive to the economic pain that could result from a disruption of that trade.”
The number one merchandise U.S. export item to China in 2016 was: Oil seeds and grains (mainly soybeans), CRS pic.twitter.com/G34mlwzMtA— Farm Policy (@FarmPolicy) March 11, 2017
The Register article pointed out that, “‘The Chinese are huge importers of American agricultural products,’ said James McGregor, the China chairman for Apco, an international business consultancy. ‘That could be a target if China wants to send a signal to America that it had better back off.’
“For all the challenges, though, several observers of the China-U.S. trade relationship saw great hope in Branstad’s appointment.”
Former Senator Dole formerly introduced Mr. Lighthizer to the Committee yesterday and during his remarks noted that, “I come from a farm state, Kansas. As Pat Roberts (R., Kans.) knows…[w]e all have — I know all of you, I think most all of you– there are farmers in every state. I don’t care what crop it is. Vegetables or cotton or wheat. We’d be lost without a strong advocate for agricultural trade.”
And in his remarks at the Finance Committee, Ag Committee Chairman Roberts pointed out that, “Last month…[we] met with new members of the White House Trade Council. They read to us the administration’s marching orders for trade. They had four goals and 13 policy objectives. Since that meeting the list has now grown to 24. On this list of goals, agriculture is listed as number three. Given the rough patch that we are in today, given 16-year low in prices, and other considerations, I believe it should be number one.”
Chairman Roberts added, “Last month, Senator Stabenow and myself chaired a field hearing. We had 21 witnesses. Everyone brought up the issue of trade.
And a news release yesterday from Chairman Roberts indicated that, “Mr. Lighthizer said that he would prioritize agriculture.
“Roberts then explained the tough farm economy saying:
‘In Kansas, we have grain on the ground. If we do not sell agriculture commodities over the next several months, you, sir, will have a problem on your hands. We all will have a problem on our hands.’
William Mauldin and Jacob M. Schlesinger reported yesterday at The Wall Street Journal Online that, “Iowa Sen. Charles Grassley ticked off a series of agricultural products—from pork to soybeans—that have enjoyed greater exports to Mexico under Nafta. Mr. Grassley warned that a trade war could have ‘real and serious economic consequences for farmers,’ adding that ‘when we are retaliated against, it’s often done through countries taking actions against our agriculture.’
‘What do I say to my rice farmers concerned that there will be retaliation?’ asked Louisiana Republican Sen. Bill Cassidy.
The Journal writers added that, “Many lawmakers pushed Mr. Lighthizer to shed more light on the administration’s plans for renegotiating Nafta, but he demurred, saying he wasn’t yet part of the administration, and many details had yet to be ironed out. He said no decision had been made yet on whether to pursue a trilateral discussion with the other two partners, or to have separate sets of talks with Mexico and Canada.”
Washington Post writer Ana Swanson pointed out yesterday that, “The administration has not yet notified Congress of its intent to renegotiate NAFTA, which would officially begin consultations between the Congress and the administration on the deal.”
And, Reuters news reported yesterday that, “In renegotiating the North American Free Trade agreement with Canada and Mexico, [Lighthizer] said it was important not to lose gains in agricultural exports to those countries while encouraging more production to return to the United States.”
Beyond China and NAFTA, DTN Ag Policy Editor Chris Clayton reported yesterday that, “Lighthizer pointed out he had a long history in agriculture in prior posts at the USTR and had been asked by President Ronald Reagan to negotiate with the Soviet Union to restart grain sales after the 1970s grain embargo. Lighthizer added he also had gotten some sage advice on agriculture from a senator. “‘As you go through doing your job, remember that you don’t eat steel.’ That is something that stuck with me … So I assure you we will prioritize agriculture,’ Lighthizer said.
“Agriculture was set to be a winner under the Trans Pacific Partnership, Lighthizer said. In getting back to ag trade, Lighthizer said Japan would be a primary target to increase market access and reduce barriers.”
The DTN article added that, “‘It is hard for me to understand why we tolerate so many barriers to agricultural trade when America is the No. 1 producer of agricultural products … I think opening up more markets for agricultural sales is a priority for us,’ Lighthizer said.”
Lastly, Don Lee reported yesterday at the Los Angeles Times Online that, “Despite support from senators in both parties and agreement on the urgency of having a trade representative in place, it’s uncertain when Lighthizer’s nomination will come up for a full Senate vote.”