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NAFTA- Recent Developments as President Trump Addresses AFBF Members on Monday

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.

Back in December, Bloomberg writers Andrew Mayeda, Josh Wingrove, and Eric Martin reported that, “The U.S., Mexico and Canada are heading into 2018 with no clear plan for saving the North American Free Trade Agreement.”

The Bloomberg writers noted that, “With a general election in Mexico and a U.S. congressional vote next year, time is running out to salvage the 23-year-old accord, which governs more than $1 trillion in trade. President Donald Trump has threatened to pull out of the deal if a new pact doesn’t favor the U.S. The next round of talks in Montreal from Jan. 23-28 is looming as a key moment.”

Also last month, DTN writer Todd Neely reported that, “Ahead of a scheduled meeting with U.S. Trade Representative Robert Lighthizer, Sen. Charles Grassley, R-Iowa, on [Dec. 19th] told agriculture journalists there may be indications a renegotiation of the North American Free Trade Agreement isn’t going so well.

“Grassley said he has had discussions with someone in ‘the bureaucracy’ about possible contingencies if the United States backs out of NAFTA. Chief among concerns for farmers is what happens to commodity prices if renegotiations fall through.

‘There is some talk (among federal agencies) about putting together a pot of money (as a commodity price support) if we pull out of NAFTA,’ Grassley told reporters.

The DTN article quoted Sen. Grassley as saying, “Farmers don’t want money from the federal treasury, they want it from the marketplace. I was informed of this from a person who ought to know what they’re talking about. I will probably use this from my point of view that this indicates a pessimistic view of how things are going. I’m not sure what Lighthizer will say.”

And Tony Dreibus reported last month at Successful Farming Online that, “Farmers need to have a backup plan in the event the U.S. exits the North American Free Trade Agreement (NAFTA), said Ted McKinney, the U.S. undersecretary for trade and foreign agricultural affairs, in an exclusive interview with Abandoning NAFTA still seems to be a real possibility, amid reports negotiations aren’t going as well as hoped.”

The majority of U.S. agricultural exports, by value, go to five key markets including our NAFTA partners Canada and Mexico. USDA- Economic Research Service (April 21, 2017).

Meanwhile, a DTN update on December 29th indicated that, “More and more, lawmakers are weighing in with the administration on the perils of dumping NAFTA. For example, Bloomberg is reporting this week that the Senate Finance Committee Republicans warned the administration trade czar on the ‘high price for the U.S.’ if the administration pulls the plug on the North American Free Trade Agreement.

Committee Republicans told USTR Robert Lighthizer that it would be a ‘paradox of enormous irony’ if Congress passes a pro-growth tax bill and a U.S. exit from NAFTA causes a farm recession and tanks the stock market, Senate Agriculture Committee Chairman Pat Roberts, R-Kan., told Bloomberg.

The DTN update noted that, “‘I think Bob gets that,’ Roberts said, adding that Commerce Secretary Wilbur Ross and others in the administration might have different ideas. Lighthizer met with Roberts and other Finance Committee Republicans Dec. 19.”

More recently, Politico writer Adam Behsudi reported in Friday’s Morning Trade that, “A group of six Republican senators visited the White House on Thursday to continue a defense of NAFTA in the face of President Donald Trump’s threats to withdraw from the agreement.

“Senate Agriculture Committee Chairman Pat Roberts led the charge, reporting afterward that the president ‘really listened to our concerns.’

“‘I delivered the message that farmers and ranchers need to grow export markets and maintain our status as a reliable supplier, more especially with Canada and Mexico in NAFTA renegotiations,’ Roberts said in a statement. ‘The president understands the difficulty farm country is going through. I told him we need a good farm bill and the best trade agreements possible for all sectors of our economy.'”

The Politico update added that, “Sens. Roy Blunt, Cory Gardner, John Hoeven, Dan Sullivan and John Thune also attended the meeting, which was a prelude to Trump’s speech to the American Farm Bureau Federation’s annual conference on Monday afternoon.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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