WASHINGTON, Nov. 1, 2017 – The U.S. farming sector is quickly losing confidence that the Trump administration is looking out for farmers’ interests as it negotiates a new North American Free Trade Agreement.
Representatives of farm groups like the American Soybean Association and the National Association of Wheat Growers are expressing new concerns after recent comments from U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross that suggest they don’t understand the potential impact of losing NAFTA for farmers.
With billions of dollars of pork, beef, wheat, rice, corn and soybean sales at stake, U.S. farm groups have become increasingly worried that the Trump administration will scuttle the negotiations and pull out of the existing 23-year-old pact with Mexico and Canada.
Both Ross and Lighthizer have promised in the past that their goals were to “do no harm” to agriculture when it came to rewriting NAFTA, but both have also suggested recently that scrapping the trade pact would not do much harm.
“If we end up not having an agreement, my guess is that all three countries will do just fine,” Lighthizer told reporters recently. “There’s a lot of trade. There’s a lot of reasons to trade.”
Randy Spronk, a Minnesota pork producer and former president of the National Pork Producers Council, expressed disappointment in Trump’s trade officials.
“We know that (USDA) Secretary (Sonny) Perdue understands the risk to agriculture from losing the Mexican and Canadian markets, but it’s not clear that other members of the administration’s trade team understand that termination would be economically devastating for farmers, ranchers and food and agriculture workers,” Spronk said Tuesday at a U.S. Chamber of Commerce event to highlight the importance of NAFTA to the U.S. agriculture sector.
Senate Agriculture Committee Chairman Pat Roberts, who also spoke at the event, acknowledged the tough talk about terminating NAFTA from Lighthizer and Ross, and stressed that he did not approve.
“There is sort of a pervasive view that NAFTA could be terminated, and I know that they feel that basically it’s a means to an end, but I think that’s the wrong message – that’s the wrong way to approach it,” Roberts said. “I know Bob Lighthizer. He’s a good man … He knows the value of agriculture, but the path he may take – that of (President Trump) – is a path that I think is fraught with a lot of danger.”
Farm groups agree.
“We feel that the negotiations are not heading in a direction that can result in a NAFTA 2.0 that can be agreed to by Canada, Mexico and passed through (the U.S.) Congress,” an American Soybean Association official said this week.
And the death of NAFTA would be the death of pork exports to Mexico, said Spronk. There are no tariffs on U.S. pork exports to Mexico under the trade pact, but that would end if Trump withdraws the U.S. from NAFTA. Faced with tariffs as high as 40 percent – the pre-NAFTA level – Mexico would eventually shut out all U.S. pork in favor of shipments from Europe and elsewhere, he said.
“That would result in the loss of 5 percent of U.S. pork production at a cost of $12 per individual hog,” he said. “The cumulative impact on the U.S. pork industry would be $1.5 billion.”
On a personal note, Spronk said he would lose about $2.5 million per year in revenue on his own farm if the U.S. lost its Mexican market.
Meanwhile, the losses are piling up even though NAFTA is still in place and the renegotiations are still moving forward, said Gordon Stoner, president of the National Association of Wheat Growers.
It’s not just the U.S. farmers who are worried the U.S. will pull out of NAFTA, but Mexican importers as well, and they are already starting to find new suppliers outside the U.S., Stoner told Agri-Pulse in an interview.
Mexico and Argentina signed a phytosanitary protocol last month to allow Mexican millers and bakers to buy wheat from the South American country, and that trade is already taking place, according to a report from USDA’s Foreign Agricultural Service. The first shipment of 30,000 tons of Argentine wheat is expected to arrive in Mexico in December and another 30,000-ton purchase is being arranged now.
Stoner pointed to the controversial concessions that U.S. negotiators have been demanding from Mexico and Canada during the new NAFTA talks – demands that negotiators from the two countries have flatly refused – as the main threats to a successful renegotiation of the trade pact. The U.S. wants a provision that would make it easier for American fruit and vegetable growers to file anti-dumping complaints against Mexico. It is demanding that Canada end its supply management dairy system.
“Mexican mills and the Mexican government are not going to be held hostage to America and they are exploring new supply channels, and I believe the sales (of Argentine wheat) are a direct result of that,” Stoner said. “The damage has already been done. We’ve used the term collateral damage. You’re seeing that right now.”
And it will likely only get worse, he said.
“I believe in the days to come we will continue to see more sourcing (from Argentina),” Stoner said. “Will we be thrown completely out of the (Mexican) market? Certainly not, but it was our market to lose and we’re losing it. It’s a trickle at this point, but it could turn into a torrent.”
As to whether the Trump administration gets the message from agriculture and other pro-NAFTA sectors, it’s unclear, said Sen. Ted Cruz, R-Texas, who also spoke at the Chamber of Commerce event.
Cruz said he hopes the primary goal of the Trump administration in rewriting NAFTA is to expand trade with Mexico and Canada, but said that might not be the case. If the goal is to further protect U.S. markets, and as a result, reduce trade, he said, that would do “profound damage” to the U.S. economy.
“Standing here today, I don’t know which path the administration will take," Cruz said. “A loss of NAFTA and a loss of access to the Mexican and Canadian markets would impose massive economic costs on Texas and the United States. My hope is we don’t go down that path.”
Spronk, the Minnesota pork producer, agreed.
“If the administration follows through on its threats to withdraw from NAFTA, the giant sucking sound would be the air going out of the economy of rural America as farmers and ranchers take a major financial hit,” he said.
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