Trade Agreements
Lately, trade agreements between nations have been in the news almost every day. The North American Free Trade Agreement (NAFTA) has been leading the way.
A couple of weeks ago, when President Trump spoke to the American Farm Bureau Federation, trade talks and especially NAFTA were front and center. When President Trump was elected, one of his campaign promises was to do away with all trade agreements and negotiate unilaterally or one-on-one with each country. In President Trump’s life as a developer, that was most likely how he did business, and of course, it’s a lot like how you and I do business.
Speaking to the American Farm Bureau, President Trump said all the right words. He praised the job American agriculture was doing and seemed to understand American agriculture. We appreciate that.
When one talks of agriculture trade between countries, it’s a complex discussion. When that discussion is about NAFTA, it really gets complex. Canada and Mexico are our neighbors, and we do a ton of business with both countries. They both buy a lot of grain from America, and we also sell them a lot of cars and other products, too. On the ag side, we send both countries tons of pork, even though the U.S. also just allowed Mexico to export pork here. That decision was based on Mexican pork health issues.
America used to export more cattle to Mexico and Canada, but that has changed. We are now a large net importer. In 2017, total imports of Mexican cattle were 1.057 million head. That represents a 12 percent increase from 2016. In addition, the U.S. imported an additional 602,000 head of cattle from Canada. When we total both cattle and beef, the U.S. ran a negative trade balance with NAFTA of around $1.8 billion. This number does not include variety meats, hides or any other such products. A lot of hides do go to Mexico for tanning, and almost all cattle coming from Mexico are feeder cattle to Texas and New Mexico, along with a few roping steers.
Say you are involved in Nebraska agriculture, where most of the grain and oilseeds produced go to Mexico and Canada, but not many head of cattle do. How does your governor lobby for NAFTA? The products have to be broken apart.
They say Mexico will not be so hard to negotiate with, but Canada will be tough. A while back, Canada filed a complaint with the World Trade Organization (WTO) over tariffs from the Trump administration just before talks were started. That action didn’t set the stage for good negotiations. The 32-page complaint referenced close to 200 examples of alleged American transgressions against Canada and other countries. The WTO has never been a big fan of the U.S., so it will be interesting to see how that goes.
There is no doubt we do need NAFTA and other trade agreements, but they have to be fair to all. We send a lot of cars to Mexico and Canada, but a good deal of the parts for those cars come from not only Canada and Mexico but from around the world. I read where there are now more Cadillacs sold in China now than in the U.S.
It’s a new time out there, and we have to take care of ourselves and negotiate trade agreements product by product.
