Whether it is NAFTA, TPP or any other trade deal it looks like they’re all on the table following the election by the American people of President Donald Trump who ran exactly on this basis.
Tyler Fulton the director of Risk Management with H@ms Marketing Services says any disruption in U.S. pork exports to Mexico as a result of the planned renegotiation of NAFTA will negatively affect North American live hog markets.
Trump immediately withdrew the U.S. from the Trans-Pacific Partnership and plans to renegotiate the North American Free Trade Agreement.
Fulton says there is so much uncertainty over whether or not the TPP would be ratified anyway that, while disappointing, its demise will not impact current cash or futures values but, the renegotiation of NAFTA is probably the source of the greatest uncertainty in hog markets today.
“With Trump’s focus on renegotiating, in particular with Mexico in trying to get a better deal, I think it threatens the current trading relationship and it could lead to a de facto trade war,” he said. “In the event that happens, I think, pork sold from the United States into Mexico would probably be among the first things that Mexico would apply a tariff to. As it sits right now Mexico consumes roughly eight per cent of all American pork produced and so, if anything came to disrupt that trade, I think we would probably immediately feel some price implications in the cash market.”
Fulton says as the story develops on the NAFTA renegotiation, he thinks it is being factored in quite quickly into pork markets and is kind of limiting gains that otherwise the market would see.
“Because of uncertainty over NAFTA, there’s a lot of uncertainty as to whether or not we can expect gains in exports, in particular to Mexico, but also to other countries to be maintained as we’ve seen over the last two months,” he said.
On the other hand, Rick Bergmann, Chair of CPC and V-C of Manitoba Pork is encouraging those who have concerns with NAFTA to look at the benefits the agreement has created for agriculture and follow that lead.
Trade dominated the key topics of discussion as representatives of Manitoba Pork took part in the 2017 Iowa Pork Congress in Des Moines.
Bergmann says there’s widespread agreement within the pork sector in both Canada and the U.S. that NAFTA has been working well for agriculture.
“On the agricultural forefront, when you hear comments about NAFTA not being a good deal or there’s trouble with NAFTA in the agricultural sector and specifically the pork sector, I have heard no comments of anything negative within that agreement. It’s a 23 year old agreement and it has benefitted us dramatically.”
Bergmann says they’ve held discussions with producers, industry, and some governments on the value of that.
“We really believe that, when there’s something as positive as agricultural trade through the NAFTA agreement, if there are any areas within that agreement that show weakness, I think there’s opportunity for those people to look at how successful Ag is and maybe they could implement some of the things we have done in a way to enhance trade in such a positive way.”
Bergmann says, in the wake of the demise of the Trans-Pacific Partnership, there will be a greater focus on bilateral agreements. •
— By Harry Siemens
