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Mexico Won't Drop U.S. as Supplier Because of NAFTA Anxiety - Perdue

WASHINGTON - The United States offers too many advantages as a food and ag supplier for Mexico to look elsewhere, Agriculture Secretary Sonny Perdue said on Friday, likening the U.S. position to "a corner store location...We will take advantage of that."

During a teleconference near the end of two days of meeting with Agriculture Secretary Jose Calzada Rovirosa, Perdue said, "I did not get any indication they are seriously considering" a shift to Argentina, Brazil, or other ag exporting nations for corn and other farm imports. 

Mexico is the No 3 market for U.S. farm exports, forecast to buy $18.5 billion of the goods this year. It is a top customer for U.S. corn, soybeans, pork, and dairy. One of every $7 in U.S. exports sales comes from Mexico.

"I think, again, we have such productive and logistical advantages...We have a corner store location for their supplies. We will take advantage of that," responded Perdue when asked about reports that Mexico was shopping around.

U.S. corn sales to Mexico are down by 7% this year and are likely to erode further, said the U.S. Grains Council, a trade group at a House Agriculture Committee hearing on Wednesday. An array of farm and trade groups said customers are hedging their bets about access to U.S. farm exports and looking for alternative suppliers. 

“We have strong but unconfirmed evidence that Mexico is slated to purchase between seven and eight cargoes from South America beginning in August and September,” said Floyd Gaibler of the Grains Council. Mexican companies are shifting to the spot market for corn and co-products rather than committing to longer-term contracts. Tom Hammer of the National Oilseed Processors Association said customers in Canada and Mexico “are making adjustments now” toward short-term purchases.

The first round of negotiations for the "new NAFTA" are set for August 16 to 20 in Washington.

Perdue said he and Calzada discussed the issue of agricultural labor, adding that other parts of the Trump administration hold the lead position on immigration policy. "We are working on a new program that will provide a legal guest worker program," said Perdue. U.S. farm groups say the H-2A guest worker program needs reform. They also argue that undocumented farm workers should be given legal status. Up to 70% of farm workers are believed to be undocumented.

U.S. fruit and vegetable growers complain they are losing sales to a flood of lower-priced produce from Mexico - unfairly subsidized by the government, they say. Perdue said not all sectors of U.S. agriculture benefited equally from NAFTA and the goal in upcoming negotiations is to maintain beneficial aspects of NAFTA and remedy its shortcomings.

Separately, Perdue said in a statement that Japan's imposition of higher tariffs on imports of frozen beef "is likely to increase the United States' overall trade deficit with Japan." The "snapback" tariffs, to shield domestic producers from a surge in imports, will give an advantage to Australian beef, said Australian news media. Australia has a free trade agreement with Japan that protects it from the higher tariffs while the United States does not, said Australian beef analyst Angus Brown.

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