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BREAKING: New Trade Rep. talks NAFTA

Cattle and Beef Industry News
May 19, 2017
by WLJ
USTR Robert Lighthizer being sworn in on May 15
USTR official photo

The newly-minted U.S. Trade Representative lost no time on honeymoons. Just three days after he was sworn in, Robert Lighthizer jumped right into the deep end of the trade pool. He announced, via letters sent to Congressional leaders, that the renegotiation of the North American Free Trade Agreement (NAFTA) would begin as early as mid-August.

“I am pleased to notify the Congress that the President intends to initiate negotiations with Canada and Mexico regarding modernization of [NAFTA],” his May 18 letter read. “We intend to initiate negotiations with Canada and Mexico as soon as practicable, but no earlier than 90 days from the date of this notice.”

The letter was relatively short, but noted that Lighthizer and President Donald Trump are “committed to concluding these negotiations with timely and substantive results for U.S. consumers, businesses, farmers, ranchers, and workers…”

As has been covered in priorstories in WLJ, beef and cattle trade readily across the three NAFTA countries. With the current NAFTA arrangement, trade goods can flow mostly freely across all of the North American borders without quota or tariff.

Current NAFTA trade
In raw volume, our current trade balance with Canada and Mexico does appear to be in the U.S. detriment. The U.S. imports more beef and cattle from Canada and Mexico than it exports to them. For example, in 2016, the U.S. had a 409.83 million-pound beef trade deficit with Canada. With Mexico, that number was 99.64 million pounds.

 The cattle trade deficit is also considerable. In 2016, Canada sent us 727,705 head more cattle than we sent them, and Mexico sent us 914,400 more head than the U.S. sent south.

Despite this, analysts and trade experts have argued that NAFTA is a really good deal for cattle and beef.

“Since we do have an enormous market for ground beef in this country, the imports actually make our cattle worth more,” Dr. Derrell Peel, Oklahoma State University extension livestock marketing specialist, told WLJ recently. “Which drives producers nuts when you tell them that sometimes, but it’s true, which I try to point out.”

He explained that domestic demand for ground beef has shaped the seemingly backwards situation where our current trade situation actually helps the industry.

“If it weren’t for the hamburger market, it would be a very different situation with respect to the imports.”

Peel added that most of the beef imported from Canada and Mexico is lean trimming beef for processing. What goes out is higher-value grain-finished cuts.

Read more in-depth coverage of this issue at WLJ as this more information becomes available. — WLJ
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