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Agricultural Trade Searches for a Sweet Spot

Trade disputes can escalate into a trade war, but some disputes have merit, say some.

During last year’s election, bashing trade agreements was as irresistible to presidential candidates as a pile of pork chops is to a pack of puppies.

President Donald Trump, Hillary Clinton and Sen. Bernie Sanders (I-VT) all bashed the Trans Pacific Partnership (TPP) trade agreement during last year’s presidential campaign. President Trump killed the TPP as one of his first presidential acts. The latest word is that President Trump wants to renegotiate the North American Free Trade Agreement (NAFTA).

Farm group officials and U.S. House members weighed in on agricultural trade at last month’s North American Agricultural Journalists annual meeting in Washington, D.C.

“Farmers Union is in line with the Trump Administration with TPP,” says Zach Clark, government relations representative with the National Farmers Union. Changes to NAFTA, though, make NFU nervous, says Clark, as does trade rhetoric by the Trump administration in general. In fiscal year 2016, 47% of total U.S. agricultural exports went to China, Canada, and Mexico. Disputes can escalate into a costly trade war between the U.S. and these countries, said speakers.  

“We are concerned about the forceful rhetoric directed at those three countries,” Clark says.

Sen. Pat Roberts (R-KS) says President Trump’s nominee for U.S. Trade representative, Robert Lighthizer, has experience negotiating trade bills. “He knows most trade bills are overcriticized and oversold,” says Roberts. “There is a sweet spot there.”

Roberts is apprehensive, though, about the Trump administration’s lumber and dairy trade disputes with Canada. “I think that’s asking for trouble, as opposed to whatever accomplishment they might want to accomplish.” He is concerned it could complicate other issues between the U.S. and Canada.

Canadian Trade Troubles

However, Rep. Collin Peterson (DFL-Minnesota) thinks the Trump administration has a point.

“This issue has evolved since I first came in the House (in 1991),” he says. “We had a softwood lumber agreement and it got undone. It is not working anymore. So I support the softwood lumber (argument) in what they are talking about.

“I don’t think they understand what is being done in dairy,” he continues. “Some people are just waking up to NAFTA. We allowed the Canadians to keep their (dairy) supply management system in NAFTA. And we allow them to export to us, that is what we agreed to. That is one reason I voted against NAFTA, in addition to sugar, too.”

He notes Grassland Dairy Products, a Greenwood, Wisconsin, firm, found a loophole to enter the Canadian market selling ultra-filtered milk, a milk protein concentrate that works well for making cheese. This dodges tariffs that Canada applies to other U.S. dairy products. Impacted are 75 dairy farmers who sell milk to Grassland Dairy who had their contracts cancelled.

“I think Trump is right about this,” Peterson says. “This needs to be taken on. I support him on that.”

What the Trump Administration Thinks

“To be fair, prior to the election, both (Sen. Mitch) McConnell (R-KY) and Speaker (Rep. Paul) Ryan (R-WI) said they did not have the votes to pass TPP (in 2016),” says Ray Starling, special assistant to the president for agriculture, trade, and food assistance. Thus, it’s impossible to compare the current trade picture to a multilateral trade agreement that had no chance of becoming law.   

“We have to have access to new markets,” says Starling. However, he adds, questions must be answered in trade deals regarding items like disputes over biotechnology, intellectual property, and phytosanitary issues. “We have to make sure they are based on scientific standards,” he says.

TPP left a good foundation in place for bilateral trade agreement with countries in the TPP, says Rep. Mike Conaway (R-TX), who heads the House Agriculture Committee.

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