Washington — One of the first moves this week by President Donald Trump was to officially withdraw from the Trans Pacific Partnership – a trade deal the United States had worked out with 12 Pacific Rim nations. The TPP drew scorn from candidates on both sides of the aisle in last year’s presidential race.
This week Trump also voiced his disapproval with the North American Free Trade Agreement (NAFTA) a trade pact among Mexico, Canada and the United States, which has been in place since 1994. He has said he would like to withdraw from that trade deal.
A meeting between Trump and Mexico’s president is slated for next week to discuss the trade deal as well as immigration issues and “the wall.”
Various farm groups see the trade pacts differently. National Farmers Union has been a staunch opponent of the TPP and praised the Trump Administration’s decision to withdraw from the trade agreement.
The organization’s President Roger Johnson said that the TPP was a continuation of “our nation’s deeply flawed trade agenda and we’re pleased that the Trump Administration has decided to formally withdraw the United States from the pact to prioritize a fair trade agenda.”
Free trade vs fair trade
For too long, he added, U.S. trade negotiators have prioritized a “free-trade agenda over fair trade” which has led to a massive $531 billion trade deficit, lost jobs and lowered wages in rural communities.
“It’s time our country refocuses the trade agenda to prioritize balanced trade, U.S. sovereignty, and U.S. family farmers, ranchers and rural communities,” Johnson said.
The Trump Administration should look to do that with a “level of tact” that does not motivate trade partners to take retaliatory actions or threaten the integrity of positive trade markets that American agriculture relies upon, Johnson said.
Reacting to the executive order withdrawing from the TPP, American Farm Bureau president Zippy Duvall commented that agriculture depends on maintaining and increasing access to markets outside the United States. “Trade is vital to the success of our nation’s farmers and ranchers. More than 25 percent of all U.S. agricultural production ultimately goes to markets outside our borders,” he said.
Farm Bureau had viewed TPP as a positive agreement for agriculture – one that would have added $4.4 billion annually to the struggling farm economy, he said. Following Trump’s decision, it will be critical that the new administration “begin work immediately to do all it can to develop new markets for U.S. agricultural goods and to protect and advance U.S. agricultural interests in the critical Asia-Pacific region,” Duvall added.
American agriculture nearly always comes up a winner when trade agreements remove barriers to U.S. crop and livestock exports, he said, because we impose very few compared to other nations.
“We have much to gain through strong trade agreements. But we need the administration’s commitment to ensuring we do not lose the ground gained -- whether in the Asia-Pacific, North America, Europe or other parts of the world,” he added.
Duvall said it is important to re-emphasize the provisions of the North American Free Trade Agreement with Canada and Mexico that have been beneficial for American agriculture. U.S. agricultural exports to Canada and Mexico have quadrupled from $8.9 billion in 1993 to over $38 billion today, due in large part to NAFTA. “Any renegotiation of NAFTA must recognize the gains achieved by American agriculture and assure that U.S. ag trade with Canada and Mexico remains strong,” he said.
Wisconsin Congressman Ron Kind said he has had many conversations with Wisconsin farmers over the past few months, and “they are deeply concerned that by leaving TPP they will not have access to markets to sell their products in,” which will cost us jobs in Wisconsin.
Kind said the United States can’t afford to “simply walk away from the global stage and cede leadership in the fastest growing area of the global economy to China.” With 95% of the world’s population living outside our borders, U.S. farmers, workers, and businesses need trade to compete in the growing 21st-century global economy, he added.
The American Feed Industry Association agreed, saying it was “extremely disappointed” with President Trump's executive action to withdraw from the TPP.
“The TPP, and agreements like it, are key to setting the terms and rules for future trade relationships, creating higher standards and expectations than previous trade deals,” said AFIA President and CEO Joel G. Newman. While the U.S. economy generally deals with a trade deficit, agriculture is the one segment where our country enjoys a strong trade surplus.”
Despite a slowdown in overall trade, brought on by many factors including the strong dollar, U.S. agriculture exports, including commercial feed, are increasing, he added, and trade agreements like the TPP, allow U.S. producers to take advantage of growing overseas demand.
Newman said that much of this growing demand is in the Asia-Pacific region, but mounting competition and new trade agreements within that region that exclude the United States will continue to block opportunities for the U.S. feed industry to capture this demand.
“The TPP was intended to assist the United States in setting a global trade agenda, addressing international competition and combating continued market share losses in the region,” said Newman. “Without TPP, the U.S. feed industry will lose more than the opportunities provided by tariff reductions. We will lose the opportunity to facilitate new trade relationships by addressing larger sanitary and phytosanitary issues, environmental protections, domestic job creation and regulatory cooperation.
“As President Trump further assesses U.S. trade relations in the Pacific Rim and any potential trade agreements going forward, we hope components of TPP beneficial to our industry will be preserved,” Newman added.
Two of the nation’s largest dairy lobbying groups saw withdrawal from the TPP as a lost opportunity for the dairy industry and hoped that the existing trade deal with Mexico would not go away anytime soon.
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) urged the Trump Administration not to retreat from pursuing new trade opportunities in the Pacific Rim, and to protect the agricultural trade relationship between the United States and Mexico – in light of many comments that has been made during the campaign and in the early days since the swearing in about “tearing up NAFTA.”
The NMPF and USDEC had supported the Trans-Pacific deal because they said it contained benefits for America’s dairy farmers. A retreat from TPP “must not lead to a retreat from economic engagement with growing Asian markets for American dairy products,” said NMPF President and CEO Jim Mulhern.
Acknowledging that the TPP has “no path forward” now, Mulhern said he would still “urge the Trump Administration to look for future opportunities to increase our dairy exports in Asia and around the world.
“Our competitors have been successfully negotiating trade agreements over the past several years,” Mulhern added, referring to New Zealand and Australia. This puts U.S. agriculture at a competitive disadvantage if we don’t pursue our own initiatives, Mulhern said.
Matt McKnight, Acting Chief of Staff for USDEC said that the TPP “was far from perfect” but was “beneficial to the U.S. dairy sector” because in addition to new market access, it also made significant progress in focusing on other trade barriers, including sanitary/phytosanitary standards, and the “abuse” of geographical indications to block competition in common food categories.
McKnight said one approach the new administration could take is to replace TPP with bilateral agreements with countries such as Japan, Vietnam and others in Southeast Asia.
The two dairy groups were part of a cadre of 130 farm and food organizations who joined in callng on the Trump Administration to preserve the hard-fought agricultural markets in Mexico – the top market for U.S. dairy exports, totaling $1.2 billion in 2016. Mulhern said that Canada as a trading partner has worked to undermine dairy trade but said that NAFTA “has opened a major door to Mexico that we don’t want slammed shut.”
McKnight noted that “the U.S. dairy sector exports 15 percent of its milk production, or one day’s worth of milk production out of each week. In 2015, those exports were worth over $5 billion.