President Donald Trump announced today he has renegotiated the North American Free Trade Agreement (NAFTA) and finalized a new United States-Mexico-Canada (USMC) Agreement. Cattlemen, however see both pluses and minuses to the changed.
Kevin Kester, a fifth-generation California rancher and president of the National Cattlemen’s Beef Association, says producers from his organization view the agreement as a positive step forward with our two largest beef markets.
“This new agreement is great news for American cattle producers, and another sign that President Trump’s overall trade strategy is working,” Kester said in a statement. “Over the past quarter century, free and open trade between the United States, Mexico, and Canada has been tremendously successful for our producers, and we’re pleased that we’ll be able to maintain our existing market access while seeing other U.S. producers get a better deal than they’ve gotten in the past. Hopefully Congress will approve this new deal early next year and provide American producers with the certainty we need to continue selling our products to our partners to the north and south.”
Applaud for trade access was echoed by Robert McKnight, Jr., president of the Texas and Southwestern Cattle Raisers Association (TSCRA). “Trade is vitally important to cattle producers who, on average, send more than $2 billion in U.S. beef exports to Mexico and Canada each year. We are extremely pleased to hear the new United States-Mexico-Canada Agreement (USMCA) will maintain the market access that has been so beneficial to U.S. cattle producers over the last decade. We look forward to swift approval by Congress and the certainty of a bright future with our trading partners.”
What’s Not There
But market access is only part of the equation, says Bill Bullard, CEO, Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America.
“We fully supported the Trump Administration’s plan to renegotiate NAFTA and while the new U.S.-Mexico-Canada Agreement includes several important improvements, such as a first ever chapter on currency manipulation, improved rules of origin for the auto industry that require higher percentages of supply-chain parts to be sourced within the three countries, and changes to NAFTA’s Investor State Dispute Settlement procedures, it nevertheless ignores the interests of America’s independent cattle farmers and ranchers.”
Namely, R-CALF wanted additional protections for the meat industry from multinational packers.
“We are deeply disappointed that the Trump Administration, like previous Administrations, has folded under the pressure of the multinational meatpackers and their allies who successfully sought to make no changes to NAFTA that would help the largest segment of American agriculture – the U.S. cattle industry – overcome the abusive market power of foreign and domestic multinational meatpackers who will continue to leverage-down the price and value of U.S. cattle under the new agreement,” Bullard said.
The agreement also does not allow the U.S. to reinstate country-of-origin labeling (COOL) requirements for beef, Bullard adds.
“The agreement appears also to contain the same rules of origin for cattle and beef as contained in the original NAFTA, as well as in the failed TPP agreement,” Bullard said. ”Those rules allow Mexico to import live cattle from South America, slaughter them in Mexico, and then export the resulting beef duty free to the U.S. where it can be mislabeled as a product of the United States. Even consumers abroad can receive USA labeled beef that is actually sourced from foreign cattle.”
“Since NAFTA, the U.S. has imported on average over 2 million tariff-free Mexican and Canadian cattle each year. If we negotiated a trade agreement that allowed us to produce those cattle in America, our industry could support well over 6,000 new ranches, each with a 300-head herd size. Instead, our trade agreements continue to encourage both Canada and Mexico to overproduce. Our domestic live cattle supply chain shrank by 6.5 million domestic cattle since NAFTA and this U.S.-Mexico-Canada trade agreement will worsen our industry’s downward trend,” Bullard says.