While impeachment was on the front page of most major dailies in January, President Donald Trump was doing his best to make news of a different kind. The U.S.-Japan trade agreement went into effect Jan. 1, followed by deals with China, Canada and Mexico.
Japanese tariffs on U.S. beef, pork and dairy dropped sharply on the first day of 2020, putting U.S. suppliers on even footing with foreign competitors that were already benefiting from lower tariffs under trade deals with Japan.
For beef and pork, the U.S. Meat Export Federation is expecting much more than just the old status quo. The group is expecting U.S. exports will increase along with demand.
“The fact that Japanese consumers are going to be shouldering less of the tariff burden should increase consumption,” said Joe Schuele, a spokesman for the U.S. Meat Export Federation.
Just a couple weeks later, Trump delivered on a promise to reset the U.S. trading agreement with China. Surrounded by farmers and ranchers, he signed the “phase one” deal with China, which includes pledges from the Asian giant to buy roughly $40 billion in agricultural products over this year and next. On Jan. 29, Trump signed the new U.S.-Mexico-Canada Agreement, calling it a “colossal victory” for farmers. Several farm groups were quick to agree.
“In preserving the well-established markets of Mexico and Canada, and providing opportunities for even more exports there, USMCA will help bring the long-term economic stability necessary for farmers to not only survive but thrive,” said Brody Stapel, president of Edge, a Wisconsin-based dairy cooperative.
Beyond provisions that promise increased access to Canada for U.S. dairy, poultry, egg, wheat and wine producers, USMCA preserves the virtually tariff-free ag trade that was established under the North American Free Trade Agreement.
Some critics argue that markets haven’t yet shown much positive reaction to the China deal. And on Japan and USMCA, the president is simply getting the U.S. back on track to where we were shortly after his election. If the administration would have originally embraced the Trans-Pacific Partnership, they argue, we would have already had a level playing field with Japan and our other growing Pacific Rim markets.
However, there was no guarantee that TPP was going to be approved in Congress and the leading Democrats running for president in 2016, Sens. Hillary Clinton and Bernie Sanders, had also pledged not to endorse TPP. Sanders was not a fan of NAFTA either and he’s already said that, if elected president later this year, he’ll renegotiate the new USMCA.
That’s an interesting tactic for Sanders, because even some of the early USMCA critics in farm country have come around.
For example, the National Farmers Union opposed the free trade framework established under NAFTA and the organization initially withheld endorsement for USMCA when it was introduced over a year ago. However, the NFU Board of Directors later voted to support it after the House Democrats made several notable improvements. In a statement, NFU President Roger Johnson thanked House Democrats for working to strengthen the deal and applauded its passage:
“We are especially pleased to see significant improvements over earlier versions of this deal, including stronger labor, environmental, and enforcement provisions as well as the elimination of giveaways to the pharmaceutical industry. These improvements are the direct result of many months of negotiations by Speaker Pelosi and House Democrats, for which we commend them,” Johnson said.”
More deals ahead?
Meanwhile, the Trump team is keeping the foot on the gas in the quest for even more deals.
Last week the European Union showed it was willing to address at least some agricultural issues in free trade agreement negotiations with the U.S. And now, a U.S. government official tells Agri-Pulse the Trump administration is pushing to see just how much it can get from the Europeans.
The Europeans are proposing a scaled-back and very limited proposal to reduce sanitary and phytosanitary trade barriers, EU Trade Commissioner Phil Hogan told reporters earlier this month after he met with U.S. Trade Representative Robert Lighthizer.
Agriculture Secretary Sonny Perdue traveled to Europe for conversations in Brussels with EU officials. He said he sensed that overcoming differences between the U.S. and European Union on issues like sanitary and phytosanitary standards as well as the use of geographic indicators for certain cheeses and other products would be key to reaching an agreement. But he doesn’t think those challenges would stand in the way of a deal.
“I was encouraged to see that the president of the EU and our president, President Trump, were conversing and friendly regarding a ‘weeks, not months’ timeline on EU progress,” Perdue said, noting that USDA had provided U.S. trade negotiators with “the technical aspects and the things that we think the EU is capable of providing that would help to balance that trade relationship.”
In February, USTR’s Lighthizer is headed to India to continue talks about a potential free trade agreement with the world’s second most populous country.
There’s no official word whether agricultural trade will be included if a deal is reached with India. Senate Finance Committee Chairman Chuck Grassley said he expects that any pact that is agreed upon will likely be “minimal,” but also “maybe the start of a bigger relationship.”
Still, India — a country of 1.3 billion people — represents a vast potential for U.S. ag exports. The country is a potentially massive market for U.S. distiller’s grains, ethanol and other commodities.
Clearly, Trump trade’s team is doing the spade work to reduce barriers around the globe and expand markets for U.S. exports. Now, the “proof will be in the pudding” as farmers and ranchers eagerly wait to see their markets improve and surplus products move into international channels.