Currently browsing posts about: Trade

Quartz Africa reports that the Coronavirus-induced cancellation of the Muslim pilgrimage to Mecca will lead to large losses to Somali goat and sheep traders.

Millions of livestock from Somalia have been shipped to Saudi Arabia for the annual Muslim pilgrimage to the holy city of Mecca over many decades to feed some two million pilgrims from around the world. Livestock export during Hajj season is a lucrative business and is estimated to earn Somali livestock traders up to half a billion dollars a year.

But this year, Somalia’s goats and sheep will not join the pilgrimage because Hajj has effectively been cancelled by Saudi authorities due to the Covid-19 pandemic—only a limited number of locals are allowed to attend Hajj. It leaves the Somali livestock industry at a crossroads and will likely lead to tens of thousands losing their livelihoods.

It’s not just us who are suffering.  The terrible effects of this pandemic run deep, globally, and locally.

The basic agreement does not say much about agriculture, but the Trade Representative has produced a separate fact sheet for agriculture.

The White House says:

The agreement specifically addresses agricultural biotechnology to keep up with 21st Century innovations. And we mutually pledge to work together with Mexico to reduce trade-distorting policies, increase transparency, and ensure non-discriminatory treatment in grading of agricultural products.  This is nothing short of a great victory for farmers and ranchers because…Mexico has historically been a great customer and partner.

And then comes the kicker:

We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well, and restore us to a true North American Free Trade Agreement.

According to Politico,

Trump warned that efforts to revamp the 24-year-old pact could result in two different agreements, and threatened Canada with tariffs on automobiles if Ottawa didn’t agree to negotiate “fairly.”

Mexico’s president must be worried about Canada.  In a phone call with Trump, he said:

It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this.  And I assume that they going to carry out negotiations of the sensitive bilateral issues between Mexico — rather, between Canada and the United States.

According to the New York Times, Canada is scrambling to get in on the deal.  Why?  Three-quarters of its exports go to the U.S., and automobile supply chains are at issue.

Also according to the New York Times, Congress calmed things down a bit and the White House is giving Canada more time to figure out how to handle all this.

According to Vox, here’s how that happened.

Trump argues that NAFTA has been bad for the United States.  That is unlikely.  It’s been much worse for Mexico (see, for example, Alyshia Gálvez’s Eating NAFTA: Trade, Food Policies, and the Destruction of Mexico, out next month).

Thanks to The Hagstrom Report for providing these documents:

• Office of the US Trade Representative: United States-Mexico Fact SheetModernizing NAFTA to be a 21st Century Trade Agreement
• Office of the US Trade Representative: United States-Mexico Fact Sheet: Strengthening NAFTA for Agriculture
• White House — Remarks by President Trump in Phone Call with President Peña Nieto of Mexico on the United States-Mexico Trade Agreement
• White House — What They Are Saying: Support for President Donald J. Trump’s Trade Announcement with Mexico
• The Washington Post — Trump announces separate U.S.-Mexico trade agreement, says Canada may join later
• Informa Agribusiness Intelligence— Economic Impact of Retaliatory Tariffs from Mexico and China on the US Dairy Sector

I have been trying to track what’s happening in our current tariff war with China.  Politico Morning Agriculture helps a lot, but even so keeping up with the rounds of retaliatory tariff impositions is challenging.

Here is our “second tranche” list of Chinese imports subject to tariffs.

The Chinese are retaliating by imposing tariffs on US agricultural exports.  They publish their lists in Chinese, obviously, meaning that we non-speakers must depend on Google Translate [and see note at end].

• Annex 1: List of 25% tariff items for the United States and Canada . pdf 
• Annex 2: List of 20% tariff items for the United States and Canada . pdf 
• Annex 3: List of 10% tariff items for the United States and Canada . pdf 
• Annex 4: List of 5% tariff items for the United States .pdf

Fortunately, CNN Money has published a partial list in English of US goods hit by Chinese Tariffs

Poultry
— Frozen beef
— Fresh or cold pork
— Dried, smoked or salted pork belly
— Frozen chicken nuggets
— Frozen whole duck

Fruit and vegetables
— Farming potatoes
— Mushrooms
— Truffles
— Apples
— Cherries
— Avocados

Dairy products
— Butter
— Cream
— Yogurt

Fish
— Frozen red salmon
— Frozen mackerel
— Frozen yellowfin tuna

Seafood
— Frozen squid
— Lobster
— Canned shark fin
— Octopus
— Sea urchins

Tobacco
— Tobacco cigarettes
— Tobacco cigars

Pet food
— Canned cat food
— Canned dog food

Beverages
— Whiskey
— Modified ethanol
— Non-frozen orange juice with less than 20% sugar

Its list leaves out baked goods, for example, items of great concern to BakeryAndSnacks.com.

A group called Farmers for Free Trade has launched an advertising campaign, “Tariffs Hurt the Heartland.”

This is a mess and clearly not good for US agriculture.  President Trump, as I noted earlier, has promised $12 billion in relief.  The administration has not said where that money—which in any case will not be nearly enough—is coming from.

Does anyone know where that money will be taken from?  Which budget line?

Note on Google Translate

A reader writes:

Small correction: the annexes you linked in the newsletter should be titled “Annex XX: List of XX% additional tariff items for the United States. pdf ”

Have you wondered why Canada is dragged into this? =)

In Mandarin the character for “additional” is the same as the abbreviated reference to Canada. It’s not surprising that Google Translate failed to catch this.

President Trump says he will fix the retaliation damage his trade policy has caused for agriculture with $12 billion added to USDA programs.

The New York Times quote of the day:  “This trade war is cutting the legs out from under farmers and the White House’s “plan” is to spend $12 billion on gold crutches.”  –Sen. Ben Sasse, R-Nebraska

The USDA explains that

These programs will assist agricultural producers to meet the costs of disrupted markets. This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy.

Politico (behind paywall) quotes USDA Secretary Perdue: “”The programs we are announcing today are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in.”  It explains that the 3-part plan will:

1. Provide direct payments to growers and producers of soybeans, sorghum, corn, wheat, cotton, pork and dairy.
2. Purchase fruit, nuts, rice, beef, pork and dairy products from U.S. producers for redistribution to federal nutrition assistance programs.
3. Put resources toward finding new markets for U.S. farmers to sell their products abroad.

Not everyone loves this idea.  Politico quotes Senator Ron Johnson (R-Wisconsin):

This is becoming more and more like a Soviet-type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits…I’m very exasperated. This is serious.

It also quotes Rep. Dave Reichert (R-Wash.) observing that the bailout does nothing to preserve market access lost as a result of the tariff policies.

Some in the ag community, they say, ‘That’s great, thank you for the help’ — except that the problem then becomes we’ve lost the market, so how do we get the market back?…That’s the question.

In general, agricultural groups view this as an inadequate short-term fix for a problem that won’t go away until Trump ends the trade war.

Former USDA Secretary Dan Glickman tweeted a link to a longer statement:

Rep. Chellie Pingree (D-Maine) is introducing legislation to ensure a fairer distribution of the bailouts.  How about some trade relief for fishermen?

In the meantime, The Street reports the effect of this plan on the market: Soybean futures for November delivery settled more than 1% higher; Deere & Co. and other farm equipment stocks also went up.  CBS News also notes the rise in ag stock prices.

Analysts generally view this as a move to maintain Trump’s base of support among soy and corn producers in the lead up to the midterm elections.  It solves a short-term political problem, but does nothing to protect US agricultural markets.  See, for example, accounts from

• The New York Times editorial board
• Jerry Hagstrom “The Trade War’s High Costs.”
• Global Meat News
• Associated Press
• Washington Post 
• Colbert: Don’t even try to out stupid Donald Trump

The USDA has just updated its agricultural statistics charts.

Some of the charts deal with trade issues.  I thought this one was especially interesting.

We (or farm animals) consume most of some commodities (pork, corn, beef).  Others are mainly for export (cotton, almonds,).

This is why trade matters to much to U.S. agriculture.

I haven’t said anything about NAFTA since August, but events are moving so quickly in the Trump administration’s attempts to undo this trade agreement with Canada and Mexico that I’m having a hard time keeping up (Politico Morning Agriculture helps).

Also fortunately for anyone interested in this issue, the Haynes and Boone law firm has created the “NAFTA Renegotiation Monitor.”  This tracks the countries’ positions on more than 30 issues under debate. I’m particularly interested in agricultural and phytosanitary (translation: food safety) issues, but this is a great place to find out about any any of them.  This Monitor makes clear what is at stake:

According to Politico,

Trump has vowed to withdraw from the 23-year-old agreement altogether. That would usher in the new isolationist era that he has long threatened, potentially endangering tens of thousands of American jobs that depend on cross-border agreements for everything from manufacturing automobiles to the export of beef… officials made clear they were at an impasse on a number of changes specifically sought by the Trump administration that dovetail with its “America First” agenda. As a result, Canada, Mexico and the United States have agreed to delay their next round of talks by nearly a month 

The National Association of State Departments of Agriculture (NASDA) and similar groups in Mexico and Canada issued a joint statement calling on their governments to make sure that whatever gets done to NAFTA does not hurt agriculture.

Politico reports that 86 food and agricultural industry groups say that if the Trump administration really does ask Congress to withdraw from NAFTA to pressure Canada and Mexico into meeting U.S. demands (as it has threatened to do, then it risks causing substantial harm to the U.S. economy: “Contracts would be canceled, sales would be lost, able competitors would rush to seize our export markets, and litigation would abound, even before withdrawal would take effect.”

Furthermore, a NAFTA withdrawal would affect specific agriculture sectors.  These effects are outlined in a letter to Commerce Secretary Wilbur Ross signed by numerous agriculture organizations.

• Poultry: In 2016, U.S. poultry exports were 7.95 billion pounds, over 16 percent of total production. Canada was the second-largest market for the chicken industry and in the top five for turkey. Almost 70 percent of U.S. exports of turkey go to Mexico.
• High-fructose corn syrup: U.S. exports to Mexico would decrease by $500 million per year.
• Fruits and veggies: Canada and Mexico account for 18 percent of U.S. fresh fruit exports and 60 percent of U.S. fresh vegetable exports. Since 1993, fruit and vegetable exports from the U.S. to Mexico and Canada have more than tripled, totaling $7.2 billion.
• Beef: In 2016, U.S. beef exports to Mexico and Canada exceeded $1.7 billion and accounted for 27 percent of total U.S. beef exports.
• Dairy: Over $1 billion a year in U.S. dairy products are shipped to Mexico.

In other words, food and agriculture groups view NAFTA as good for US agriculture.  They do not view it as so broken that it needs fixing.

USDA Secretary Sonny Perdue says this about our new “trade breakthrough” with China:

The  point of US trade policy is to have open markets for our products.  USDA has a quick summary of our current balance of trade.  We are doing pretty well with it.

And here’s why:

Hence: Selling beef to China should up those numbers.

Trade rules are not easy to understand because they are so remote from most people’s lives.  But Public Citizen is keeping an eye out on what’s happening in the trade world, and making its meaning clear.

It reports that the Office of the United States Trade Representative (USTR) has just released its latest National Trade Estimate.  This reviews our trading partners’ actions that we think constitute “significant trade barriers” and want to eliminate.

What might these be?

This may be hard to believe but high on the list are other countries’ policies to promote breastfeeding, of all things.

The Trump administration wants to get rid of these “technical trade barriers:”

• Hong Kong draft code designed to “protect breastfeeding and contribute to the provision of safe and adequate nutrition for infants and young children.” This, according to USTR, could reduce sales of food products for infants and young children.
• Indonesia: USTR wants to get rid of a draft regulation to ban advertising or promotion of milk products for children up to two years of age.
• Malaysia: USTR doesn’t like its code restricting corporate marketing practices aimed at toddlers and young children.
• Thailand: USTR wants to eliminate penalties for corporations that violate laws restricting the promotional, and marketing activities for modified milk for infants, follow-up formula for infants and young children, and supplemental foods for infants.