WASHINGTON, July 26, 2017 - Speed is of the essence when it comes to renegotiating the North American Free Trade Agreement, a panel of witnesses told the House Agriculture Committee today. That’s because the uncertainty surrounding the overhaul has some importers – mostly in Mexico – turning to other suppliers to get the chicken and grain they need.
Corn, sorghum and barley exports to Mexico are down about 7 percent as buyers there begin purchasing more from South American suppliers and the situation will get worse if the NAFTA negotiations become protracted, Floyd Gaibler (pictured above), a director at the U.S. Grains Council, told lawmakers.
Much of the uncertainty that is shaking importers originates from the White House. President Donald Trump has repeatedly threatened to just pull the U.S. out of NAFTA and that has importers worried, Gaibler said.
The threat “prompted the Mexican government to look to Brazil and Argentina for alternatives sources of corn and other grain products,” he said. “We have strong but unconfirmed evidence that Mexico is slated to purchase between seven and eight cargoes of corn from South America beginning in August and September.”
Government and trade sources have set the end of the year as their goal for wrapping up the NAFTA overhaul, but that’s far from certain.
U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee last month that he wants a speedy resolution, but could not commit to a date.
“There are people who have talked about this being done by the end of the year,” Lighthizer said. “That might happen … From my point of view, I don’t have any deadline.”
Ag sector representatives fear exports will continue to fall if negotiations aren’t concluded by the end of 2017.
“If we don’t get this negotiation done by the end of the year, we anticipate that this erosion will continue,” Gaibler said. “And all of us who are in the international export business know that once you lose market share … it’s very difficult to recover it.”
The U.S. ag sector suspects that corn isn’t the only commodity that Mexico is starting to buy more from South America.
Kevin Brosch, international trade counsel for the USA Poultry and Egg Export Council and another witness at today’s hearing, said his industry’s sales to Mexico have slipped by about 10 percent this year.
Georgia, a major poultry-producing state, “has a lot to lose if those export markets shrink due to uncertainty, said Rep. David Scott, a Democrat from the state. But Scott isn’t blaming Mexican importers. “I think I would start looking for other countries to trade with in case our own deal is broken,” he said.
Committee Chairman Mike Conaway was more upbeat about the situation, saying he had faith in the Trump administration to get the best new deals possible with Mexico and Canada.
“Whether you’re focused on maintaining current market access or you are eager for the prospects of expanded trade opportunities, production agriculture stands to benefit from a modernized trade agreement with our neighbors to the north and south,” he said. “As always, we must stay vigilant and all work together to ensure we achieve the best deal possible for American agriculture.”
He also expressed the need for expediency though, and said he uses every chance he gets to remind the administration that the new NAFTA needs to be completed quickly.
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