WASHINGTON, Feb. 15, 2017 - The U.S. Grains Council has always been one of the major voices for the country’s grain exports, but the last several weeks have brought some major changes to the requirements for that job.
For starters, the Council’s international employees are now faced with the sometimes daunting task of reassuring trading partners who are reacting to developments stirred up by comments from President Donald Trump, including a pledge to renegotiate the North American Free Trade Agreement. For instance, news surfaced this week of a Mexican senator pledging to introduce a bill to buy all of the country’s imported corn from Argentina and Brazil rather than the U.S.
In an interview at the Council’s marketing conference this week in Panama, Tom Sleight, the group’s president and CEO, said that “flare-up” is just further evidence that maintaining trading relationships is “going to take a lot of work.”
“Mexico just last year became our number-one market for corn,” he said, noting that Japan had long been in the lead. “This is not the type of rhetoric that is helpful for this marketplace. Our staff in Mexico are getting some cool receptions when they talk to people that we’ve been working with for decades. That’s troubling.”
Ryan LeGrand is the director of the Council’s Mexico City office, a job he has held for almost a year and a half after previously working in the region with the Grains Council and private companies. He said the administration of Mexican President Enrique Peña Nieto has taken “a very pragmatic approach,” but “fiery, nationalistic talk” is emanating from the country’s legislative branch.
“You wonder how much of (the talk) is just for political attention,” LeGrand said. “They have the public really fired up. There is plenty of anti-American sentiment down there that I haven’t felt in my 17 years of working in Mexico.”
Talk of a border adjustment tax to help finance a wall at the U.S.-Mexico border has particularly been problematic in Mexico. Should talk turn to action and the tax is actually imposed, LeGrand tells Agri-Pulse the Mexican government will be swift and targeted in its response.
“If there are any measures taken by the American administration to tax Mexican goods going into the United States, the first sector that Mexico will retaliate against will be the grain sector,” he said, noting that American farmers should be “very aware” and “concerned with what’s going on.”
Sleight added that he thinks the U.S.-Mexico relationship “has got to improve, and I think it will.” But the issues go beyond just Mexico. Grains Council staffers positioned all over the globe all had similar things to say about the countries in which they are working and the new U.S. administration; officials are just trying to get everything figured out.
In China, governmental turnover there is only adding to the unpredictable nature of the U.S.-China relationship. Bryan Lohmar, the director of Grains Council’s China office in Beijing, told Agri-Pulse that the Chinese government traditionally doesn’t react to just statements. “They’ll react to implementing something that they think is moving against them,” he said. So Trump’s comments may not land him in hot water, but his actions could have the potential to do so.
“I think China is taking a wait-and see-position and see how things unfold,” Lohmar said. He noted that from a business-to-business perspective, and taking government squabbles out of the equation, the U.S.-China relationship is still strong.
“There’s really a growing commercial relationship that these trade tensions affect,” he said, “but I think over the long run, it’s a very positive trend that these relationships are growing.”
Despite the occasional inflammatory rhetoric, countries are still interested in doing business with the U.S.
Tommy Hamamoto, the Council’s director in Japan, told Agri-Pulse the nation is still interested in a trade deal with the United States after the downfall of the Trans-Pacific Partnership. Those prospects were buoyed by talks last week between Trump and Japanese Prime Minister Shinzo Abe.
Hamamoto said that with the loss of the U.S., the TPP is no longer as attractive for Japan. That means a bilateral deal with the U.S. is a viable option for Japan to achieve many gains that were in TPP. However, he said the so-called “sacred” products – five agricultural products that were originally off the negotiating table but were eventually brought into TPP – might not be involved in a bilateral deal.
“My best guess is the Japanese government is going to keep the position – on rice and other sacred products – out of (talks),” he said, noting that Abe’s administration hasn’t publicly staked out a position. “My hope is they will put it on the table and make a better deal. It’s better for the Japanese rice farmers at the end of the day if they have a more competitive free trade agreement to make themselves more cost efficient.”
Hamamoto said Japan may also push for increased U.S. market access for wagyu beef, a high-quality, and high price, product native to the country that is currently hampered by quotas. LeGrand said Mexico will be looking for help for its grain and dairy sectors in any renegotiation of NAFTA. And Lohmar also said China may be looking as much for recognition as a global power from the U.S. as for improvement in commercial relations.
Overall, Sleight said the Grains Council team – and the rest of the international trade community – are trying to acclimate to the new normal.
“Every day is different,” Sleight said. “We’ve got to be ready, we’ve got to be nimble, and we’ve got to pay attention.”