Trump administration misses huge opportunity to strengthen America’s cattle industry in new USMCTA
October 1, 2018
BILLINGS, Mont. — R-CALF USA CEO Bill Bullard issued the following initial statement regarding President Trump's announcement that he has renegotiated the North American Free Trade Agreement and achieved a new United States–Mexico–Canada Agreement.
"We fully supported the Trump Administration's plan to renegotiate NAFTA and while the new U.S.-Mexico-Canada Agreement includes several important improvements, such as a first ever chapter on currency manipulation, improved rules of origin for the auto industry that require higher percentages of supply-chain parts to be sourced within the three countries, and changes to NAFTA's Investor State Dispute Settlement procedures, it nevertheless ignores the interests of America's independent cattle farmers and ranchers.
"We are deeply disappointed that the Trump Administration, like previous Administrations, has folded under the pressure of the multinational meatpackers and their allies who successfully sought to make no changes to NAFTA that would help the largest segment of American agriculture — the U.S. cattle industry — overcome the abusive market power of foreign and domestic multinational meatpackers who will continue to leverage-down the price and value of U.S. cattle under the new agreement.
"The agreement does not appear to allow the U.S. to reinstate country-of-origin labeling (COOL) requirements for beef. Meaning multinational packers can continue sourcing cheaper cattle and beef from Canada and Mexico and sell that beef to unsuspecting American consumers as a product of the United States. The lack of COOL has and will continue to allow multinational meatpackers to continually displace domestic production with undifferentiated imports.
"The agreement appears also to contain the same rules of origin for cattle and beef as contained in the original NAFTA, as well as in the failed TPP agreement. Those rules allow Mexico to import live cattle from South America, slaughter them in Mexico, and then export the resulting beef duty free to the U.S. where it can be mislabeled as a product of the United States. Even consumers abroad can receive USA labeled beef that is actually sourced from foreign cattle.
"Additionally, the new agreement appears to lack any safeguards to protect the value of domestic cattle from import surges, like the 41% increase in the value of beef and cattle imported from Canada and Mexico that occurred in 2014 and 2015, which increased price-depressing cold storage volumes and contributed to the 2015 price collapse that worsened after the repeal of COOL.
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"Every time our industry's price-point is sufficient to signal an opportunity to strengthen and grow our industry, unlimited imports of cheaper cattle and undifferentiated beef enter the U.S. market and drive that price-point downward, thus eliminating opportunities for U.S. farmers and ranchers.
"Since NAFTA, the U.S. has imported on average over 2 million tariff-free Mexican and Canadian cattle each year. If we negotiated a trade agreement that allowed us to produce those cattle in America, our industry could support well over 6,000 new ranches, each with a 300-head herd size. Instead, our trade agreements continue to encourage both Canada and Mexico to overproduce.
"Our domestic live cattle supply chain shrank by 6.5 million domestic cattle since NAFTA and this U.S.-Mexico-Canada trade agreement will worsen our industry's downward trend.
"This new agreement appears to ignore the interests of America's cattle farmers and ranchers for the benefit of multinational meatpackers. We hope the Trump Administration will recognize these critical deficiencies in the new agreement and work with us to overcome the intense and aggressive lobbying efforts by the powerful meatpacking lobby." ❖