Beef Industry Talks Possible Trade Deals
Shinzo Abe, Japan’s Prime Minister, traveled to the U.S. late last week. This comes after President Donald Trump shot down the Trans Pacific Partnership (TPP)—a deal many in agriculture believe would have opened up doors to U.S. trade between 12 countries on the Pacific rim, including Japan.
The U.S. beef herd is expanding and the industry wants export market access to grow as well.
“We have a huge value in our exports, as much as $300 dollars a head with beef,” said Greg Henderson, editorial director of Drovers.
Shortly after taking office, President Trump withdrew the U.S. from the TPP agreement, considered to be a big blow to the U.S. beef industry.
“Was the TPP decision a disappointment for animal agriculture? Unquestionably, it was,” said Don Close, a senior analyst for Rabobank AgriFinance.
“I voted for President Trump, but he wiped that out right in front of us,” said Bill Sieverkropp, a cattle producer from Ephrata, Wash.
Japan was included in the deal and is one of the U.S. beef industry’s biggest buyers. Now, industry leaders are asking for some form of trade deal with the country because high tariffs are a problem.
According to National Cattlemen’s Beef Association (NCBA), Japan’s 38.5 percent tariff on fresh and frozen beef would have been cut to 9 percent with TPP.
“If it’s a bi-lateral agreement, we can support that,” said Colin Woodall, vice president of government affairs with NCBA. “We need it to start sooner than later because every day that we don’t have the ability to bring down that tariff and to compete with the Australians, we are losing $400,000 a day in our access to the Japanese market.”
Australia, one of the largest competitors with U.S. beef, signed an agreement with Japan and pays a much lower tariff rate, giving U.S. producers a disadvantage.
“The conversations we’re going to have with the Trump administration is not necessarily convincing them that trade is good, but convincing them they need to work as quickly as possible,” said Woodall.
President Trump is also vocal about renegotiating the North American Free Trade Agreement (NAFTA), a trade agreement between Mexico, Canada and the United States.
“Anything that goes in there and tweaks NAFTA, we hope it will not have an impact on the livestock and beef trade because right now, we think that’s going extremely well,” said Woodall.
“First of all, I hope we don’t tear apart NAFTA,” said Philip Seng, U.S. Meat Export Federation president and CEO. “If you look at the beef and pork complex, it constitutes about 40 percent of our total exports from the United States.”
Seng says the U.S. has to be careful not to give up a trade agreement without something to fill the void.
“My father once said you shouldn’t quit a job until you have another one,” said Seng. “I would say we shouldn’t quit a trade agreement until we have another one in place. A lot of what’s been accomplished has been productive and very good for U.S. agriculture and we can’t throw that out.”
But some are optimistic about reopening NAFTA since the president is engaging in trade talks.
“He has stated at every opportunity he’s not anti-trade, he was anti-those agreements and is pro-trade,” said Close. “Let’s give him a little bit of the benefit of the doubt.”
President Trump is also outspoken about adding more bi-lateral trade. Currently, the U.S. has agreements in place with some countries.
“If it takes a bi-lateral agreement, that would be fine,” said Tracy Brunner, former NCBA president. “If that’s an expanded multi-nation agreement, we’ll be engaged in that as well.”
“I think we have to look at all agreements and take a look at all opportunities,” said Seng. “That’s what our producers expect from us.”
One of those possible one-on-one agreements may be with the United Kingdom. President Trump met with Prime Minister Theresa May in January. However, the country has to complete the Brexit process before possible implementation.
“I don’t know if I’m optimistic on that front as well as some,” said Close. “Would it get U.S. beef to Europe? Probably. There’s going to be a lot of discussion on that before there’s really anything close to implementation.”
NCBA says even though volume may not be substantial to the country, it’s still an additional market.
“We’re looking at any opportunity out there to expand our access into any country,” said Woodall.
Producers hope trade relationships build as the beef herd continues to grow..
The Trump administration is considering taking on the EU’s 20-year ban on hormone treated beef from the U.S.
Politico reports the office of U.S. Trade Representatives (USTR) will hold a public hearing on putting an eventual 100 percent import tariff on roughly 90 European products, ranging from Roquefort cheese to Vespa scooters.
The EU has a $45 billion trade surplus with America. Most of the products targeted for U.S. retaliation are meats, but chocolate, mustard, paprika, chestnuts and hair clippers.