NASHVILLE, Tenn. — Agriculture could suffer harmful repercussions if long-standing free trade agreements are dismantled, said a trade expert with the U.S.-based National Cattlemen’s Beef Association.
U.S. President Donald Trump has served notice he wants the North American Free Trade Agreement renegotiated. He sees Mexico as the primary target from which to gain what he describes as a better deal.
“To me that was a little puzzling. We have a really positive relationship with Mexico,” said Gary Horlick, trade attorney for the NCBA.
Canada, the U.S. and Mexico have all benefitted from open trade made possible by NAFTA and the negative sentiments did not reflect the business reality, Horlick told an international trade committee meeting during the cattlemen’s annual convention held in Nashville, Tenn., last month.
“Our challenge is to make sure people in Washington do no harm,” he said.
A 90-day notice has been served to announce the government’s intentions, after which the U.S. international trade commission can launch public hearings.
About 130 agriculture organizations have already written to the government asking for special consideration.
Modernization is needed and some adjustments can be made but most are procedural changes, said Horlick.
Commerce secretary Wilbur Ross is leading the renegotiation efforts.
“He doesn’t know anything about agriculture. Part of our job and the rest of the agriculture movement will be to educate him and his colleagues about what U.S. cattle ranchers and agriculture believe in NAFTA,” Horlick said.
Opponents to the current agreement often object to how trade dispute settlements are handled. To date, the international dispute resolution has worked, even if it has not always been in the U.S.’s favour. A challenge against mandatory country-of-origin labelling for beef is an example of the system dealing with an unfair law, said Horlick.
If NAFTA ends, unfettered duty free access to Mexico and Canada would be lost. The U.S. would reinstate its tariffs, most of which were low, while Mexico could bring back the much higher tariff rates it had in place pre-NAFTA.
“When you push Mexico to give up things, it will reciprocate. There was never a good case made against NAFTA. It was all political,” said Horlick.
Canada has much to lose in this shifting climate and that needs to be communicated to government, said Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Association.
“Canada and the U.S. right now is probably the greatest success story in trade in modern history,” he said. “It is a trading relationship that makes sense. If we start breaking that apart we will lose most of the efficiencies that make us competitive to the rest of the world,” he said to a round of applause.
Trump also pulled the U.S. out of the Trans-Pacific Partnership trade agreement with Pacific Rim countries, which included Canada, within days of assuming office.
Before Trump was elected, the NCBA was confident the agreement would go ahead but instead now it is faced with negotiating trade agreements one-on-one with several countries, including Canada, Mexico and Japan.
“This is not a positive move for us because of all we had invested in TPP,” said Kent Bacus, international trade adviser for the NCBA.
Protectionism dominated the election campaign.
“The anti-trade rhetoric was very strong, not only at the presidential level but throughout the congressional races as well. We had candidates from both sides of the aisle trying to outdo each other in their trade rhetoric,” said Bacus.
Besides the loss of TPP, protectionist sentiments circulating through Washington have beaten back potential deals with the European Union and efforts to gain more access for U.S. beef into China has been laborious, he said.
Trump wants to slap a 35 percent tariff on Chinese imports and name China a currency manipulator. Those actions could undo some of the relationship-building groundwork some Americans have put into improving trade with China.
As a Washington lobbyist for the NCBA, Bacus said it is important to know the new players. Many appointments made by the Trump administration are high profile business people with a protectionist stance.
Gary Cohn, formerly of the Goldman Sachs Group Inc., is director of the National Economic Council, a position that will likely make him one of the most influential voices on economic decisions in the White House.
The National Trade Council is a new body created at the White House and will be headed by Peter Navarro, a hard-line critic of China.
Robert Lighthizer, an official in the administration of former U.S. President Ronald Reagan and harsh critic of China’s trade practices, has been named chief trade negotiator and will be responsible for seeking better trade deals aimed at reducing U.S. trade deficits.
Sonny Perdue of Georgia has been named secretary of agriculture. He is a veterinarian and former state governor who the NCBA hopes can be a strong voice for agriculture in cabinet.
Other appointees may be interested in trade but they do not have agriculture relationships, said Bacus.
“America first is the theme of all the trade policies we have seen so far,” he said.“It is going to be interpreted in a lot of different ways.”
The Trump administration also appears more interested in enforcement than opening markets.
The U.S. is signalling that it will follow through on an order from former president Barack Obama’s administration that would reinstate retaliatory tariffs against the European Union regarding beef imports.
A case before the world trade organization challenged Europe’s stance prohibiting imports of beef from cattle that received growth promoting hormones. Canada and the U.S. prevailed but no real access was ever granted, nor were the tariffs were ever used.